Disallowance u/s 14A: Prospective or Retrospective Effect of the Amendment?

Retrospectivity of tax amendment: amendment held prospective; prior rule barring disallowance where no exempt income applies.

The court held that the Finance Act amendment described as 'for removal of doubts' cannot be given retrospective effect where it alters prior law; the Finance Bill memorandum fixing commencement determined prospectivity, and existing Division Bench precedent that no disallowance can be made if no exempt income was earned was applied, subject to the ultimate outcome of the pending higher court challenge.