Section 14a of income tax, act, 1961

For the purpose computation of total income under Ch. IV ( All five heads of Income) , as per sec. 14A "No deduction is allowed for expenditure incurred in respect of exempt income against taxable income "

& If assessee claims that no expenditure is incurred and at the same time if AO is not satisfied with correctness of claim then AO may calcuate amount of disallowance as per Rule 8D

If assessing officer not satisfied with books of a/c then he will compute proposnate basis. u/s 14a NO DEDUCTION OF EXP. IN RELATION TO EXEMPT INCOME.

Sec 14A-Deductibility of expenditure incurred in relation to income not includible in total income

i)As per Sec14A expenditure in relation to exempt income in not allowed as a deduction while computing income under any of five heads of income .

ii)The Assessing officer is empowered to determine the amount of expenditure incurred in relation to such income which doesn't part of total income in accordance with such method as may be prescribed by CBDT in this regard.

iii)Such method should be adopted by Assesseing officer if he is not satisfied with the correctness if the cliam of the assessee. ,having record to the accounts of the assessee.

For determining the amount of disallowance as per method prescribed in rule 8D you can refer the attached sheet.

In short section 14A is regarding to caculation of allowable exps incurred in relation to the excempt income

if assessee has not claimed any expenditure while computing the total income. Hence section 14A is not applicable. Hence rule 8D is also not applicable.