As per Section 14A of Income tax act " No deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of total income under this act"
The amount of expenditure shall be computed in accordance with method prescribed under Rule 8D.
The following 2 amounts shall be added :
1) Expenditure directly relating to Income which does not form part of Total Income
2) 1% of annual average of monthly average of Opening & closing balance of value of investment / incomed
Refer Attached file for Illustration.
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