https://www.taxtmi.com/caselaws?id=793747 Education cess claimed as expenditure on the basis of prevailing judicial precedent did not constitute under-reporting for penalty purposes merely because it was later disallowed; the retrospective insertion of Explanation 3 to section 40(a)(ii) could not render the earlier return false. The claim also fell outside the rectification mechanism because no deduction had been allowed in assessment. Further, expenditure could not be disallowed under section 14A where no exempt income arose during the relevant year. The later amendment to section 14A applied prospectively and could not govern the year under consideration. Penalty and the section 14A disallowance were therefore deleted. en-us Fri, 19 Jun 2026 00:00:00 +0530 Tue, 23 Jun 2026 08:08:23 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=793747 Education cess claimed as expenditure on the basis of prevailing judicial precedent did not constitute under-reporting for penalty purposes merely because it was later disallowed; the retrospective insertion of Explanation 3 to section 40(a)(ii) could not render the earlier return false. The claim also fell outside the rectification mechanism because no deduction had been allowed in assessment. Further, expenditure could not be disallowed under section 14A where no exempt income arose during the relevant year. The later amendment to section 14A applied prospectively and could not govern the year under consideration. Penalty and the section 14A disallowance were therefore deleted. Case-Laws Income Tax Fri, 19 Jun 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=793747