| |
| The Tax Publishers2019 TaxPub(DT) 3343 (Pune-Trib) INCOME TAX ACT, 1961
Section 14A
Since AO before invoking the provisions of rule 8D has issued show cause to the assessee and thereafter made disallowance under rule 8D, therefore AO had recorded his satisfaction as envisaged under section 14A(3) and appeal of assessee assailing the order of AO was dismissed.
|
Disallowance under section 14A - Expenditure incurred against earning of exempted income - Mandatory pre-condition before making any disallowance under rule 8D -
Assessee company was engaged in business of trading of various items, investment and financing. It made investment for the purpose of earning dividend income which was exempt and incurred expenditure in relation to earning of exempted income. AO disallowed expenses incurred under section 14A by invoking rule 8D of Income Tax Rules, 1962. Held: It is a well settled law that road to rule 8D passes through section 14A(2). Thus, recording of satisfaction as envisaged under section 14A(2) and (3) is a mandatory pre-condition before making any disallowance under rule 8D. However, the manner of recording of satisfaction has not been laid down either under the Act or the Rules. AO before invoking the provisions of rule 8D had issued show cause to assessee and thereafter made disallowance under rule 8D. Therefore, AO had recorded his satisfaction as envisaged under section 14A(3) and there was no merit in grounds raised by assessee assailing the invoking of provisions of section 14A.
Followed:Godrej & Boyce Manufacturing Company Ltd. v. DCIT & Anr. (2017) 394 ITR 449 (SC) : 2017 TaxPub(DT) 0968 (SC)
REFERRED :
FAVOUR : Against the assessee
A.Y. :
 SUBSCRIBE FOR FULL CONTENT
|