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Chapter IV of the Act provides for the Heads of Income for computation of Total Income. In Section 14, the various incomes are classified under Salaries, Income from house property, Profit & Gains of business or profession, Capital Gains & Income from other sources. The Section 14A relates to expenditure incurred in relation to income which are not includable in Total Income and which are exempted from tax. No taxes are therefore levied on such exempted income. The Section 14A had been incorporated in the Income Tax Act to ensure that expenditure incurred in generating such tax exempted income is not allowed as a deduction while calculating total income for the concerned Section 14A was introduced to the Income Tax Act by the Finance Act, 2001 with retrospective effect from 01.04.1962. The new section was inserted in aftermath of judgment of this Court in the case of Rajasthan State Warehousing Corporation Vs. CIT1. The said Section provided for disallowance of expenditure incurred by the in relation to income, which does not form part of their total income. As such if the incurs any expenditure for earning tax free income such as interest paid for funds borrowed, for investment in any business which earns tax free income, the is disentitled to deduction of such interest or other expenditure.Although the provision was introduced retrospectively from 01.04.1962, the retrospective effect was neutralized by a proviso later introduced by the Finance Act, 2002 with effect from 11.05.2001 where under, re-assessment, rectification of assessment was prohibited for any assessment year, up-to the assessment year 2000-2001, when the proviso was introduced, without making any disallowance under Section 14A. The earlier assessments were therefore permitted to attain finality. As such the disallowance under Section 14A was intended to cover pending assessments and for the assessment years commencing from 2001-2002. It may be noted that in the present batch of appeals, we are concerned with disallowances made under Section 14A for assessment years commencing from 2001-2002 onwards or for pending assessments.