Dismissing the appeal of the revenue the Court held that Assessing Officer must give a clear finding with reference to the assessee’s accounts how expenditure related to exempt income, there must be a proximate relationship between the expenditure and the exempt income and only then would a disallowance have to be effected. (AY. 2009-10)
CIT v. Sociedade De Fomento Industrial Pvt. Ltd. (No. 2) (2020) 429 ITR 358 / (2021) 277 Taxman 6/ 207 DTR 381/ (2022) 324 CTR 524 (Bom.)(HC)
S. 14A : Disallowance of expenditure-Exempt income-Onus to establish such proximity on department-Assessing Officer must give a clear finding with reference to the assessee’s accounts how expenditure related to exempt income. [S. 10(35), R. 8D]