Dismissing the appeal of the revenue the Court held that; disallowance cannot exceed exempt income of relevant year. For computing disallowance under clause (ii) of rule 8D(2), numerical B in clause (ii) refers only to average value of entire investment that does not form part of total income. Followed ACB India Ltd. v. ACIT CIT (2015) 235 Taxman 22 / 374 ITR 108 (Delhi)(HC) ( AY.2009-10)
PCIT v. Caraf Builders & Constructions (P.) Ltd. (2019) 261 Taxman 47 (Delhi) (HC)
S. 14A : Disallowance of expenditure-Exempt income-Disallowance cannot exceed exempt income of relevant year- Instead of taking into account total investment, investment attributable to dividend was required to be adopted an thereafter disallowance was to be arrived. [R. 8D]