Income Tax Act, 1961

--Disallowance under section 14A--Expenditure against exempt income Applicability of rule 8D--assessing officer noted that assessee had earned exempt income under section 10(35) arising out of mutual fund investment, therefore, he opined that the expenditure incurred for earning exempt income should be disallowed under section 14A. Since no bifurcation was made by the assessee between total and exempt income, assessing officer disallowed total expenditure under this head. Held: Since the amount involved was not very large, High Court reserved its final conclusion on such an issue in appropriate case, therefore, it had not entertained this tax appeal by revenue on merits. However, High Court had not confirmed the Tribunal's view on the aspect that in absence of rule 8D, no disallowance could be made under section 14A of the Act, by proportionate bifurcation of the expenditure in a reasonable manner towards earning of taxable income and tax exempt income.