Case Law Analysis
|Income Tax Appellate Tribunal
Section 14A IT Act | No Disallowance Without Actual Exempt Income; Notional Forex or Interest Gains Not Taxable : ITAT Delhi
The ITAT Delhi has ruled that Section 14A cannot be invoked to disallow expenses unless there is actual exempt income earned. Notional gains from foreign currency translation or interest on capital loans, even if hypothetically linked to exempt activities, do not trigger disallowance. This shields multinational entities from speculative tax adjustments based on accounting entries rather than real income.