Disallowance u/s 14A permissible even without exempt income from AY 2022-23 onwards.

Disallowance under Section 14A of the Income Tax Act is not permissible if no exempt income is earned up to Assessment Year (AY) 2021-22. However, from AY 2022-23 onwards, disallowance is allowed even without exempt income due to a new Explanation. GST input credit is deductible if not included in the cost of goods or services, otherwise it is revenue neutral. The Assessing Officer (AO) is instructed to verify GST deductions not claimed in the Profit & Loss account, considering relevant Supreme Court decisions. The assessee's appeal is allowed for limited remand to the AO on the GST issue. .....

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