Held, that the law was well-settled that in the absence of exempt income for an AY. 2011-12, no disallowance could be made under section 14A towards expenditure relatable to exempt income. In other words, the disallowance contemplated by section 14A cannot exceed the exempt income earned in an AY. 2011-12. The Explanation to section 14A inserted by the Finance Act, 2022 was prospective in nature and could not be applied prior to April 1, 2022. (AY. 2011-12)
Dy. CIT v. Zylog Systems Ltd. (2023)101 ITR 1 (Chennai) (Trib)
S. 14A : Disallowance of expenditure-Exempt income-Disallowance to be limited to the quantum of exempt income earned-Amendment disallowing irrespective assessee is in receipt of exempt income is prospective. [R. 8D]