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| The Tax Publishers2019 TaxPub(DT) 1393 (Del-Trib) INCOME TAX ACT, 1961
Section 14A
In view of contrary stand taken by assessee it could not be said that AO was not satisfied about incorrectness of claim of assessee and, therefore, rule 8D had been correctly invoked. However, while working out disallowance under section 14A read with rule 8D only those investment which resulted into exempt income, were to be considered.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Recording of satisfaction
Assessee earned tax-free dividend income and claimed no disallowance under section 14A. On being questioned during assessment proceedings, assessee offered disallowance on estimated basis. AO invoked rule 8D and worked out disallowance. Assessee challenged this on the ground of non-recording of satisfaction in terms of section 14A(2).Held: In the return of income, assessee had not offered any disallowance under section 14A but during assessment proceedings, assessee itself proposed disallowance and that too, on estimated basis. Thus, it was clear that assessee changed its stand and yet it was not sure about exact amount of expenditure. Accordingly, it could not be said that AO was not satisfied about incorrectness of claim of assessee, and, therefore, rule 8D had been correctly invoked. However, while working out disallowance under section 14A read with rule 8D only those investments which resulted into exempt income, were to be considered.
Relied:Acb India Limited (Formerly M/s. Aryan Coal Benefications (P) LTD. v. Asstt. CIT (2015) 374 ITR 108 (Del-HC) : 2015 TaxPub(DT) 1966 (Del-HC).
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 271(1)(c)
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