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| The Tax Publishers2021 TaxPub(DT) 4174 (Del-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D
AO had not recorded satisfaction as to how and under what circumstances disallowance made by assessee company was incorrect under section 14A.had also not disputed books of account. So, in the absence of satisfaction recorded by AO, mechanical invoking of provisions contained under section 14A read with rule 8D was not permissible in view of mandate laid down under section 14A(2). Therefore, additional disallowance was deleted.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Non-recording of dissatisfaction by AO as to correctness of assessee's claim
Assessee earned tax free dividend income and claimed suo moto disallowance under section 14A AO invoked rule 8D and worked out additional disallowance. Assessee challenged this on the ground of non-recording of dissatisfaction by AO as to correctness of assessee's claim.Held: AO had not recorded satisfaction as to how and under what circumstances disallowance made by assessee company was incorrect under section 14A. AO had also not disputed books of account on the basis of which assessee come up with the plea that he had incurred the expenditure only to the tune of Rs. 29 lakhs of which it had made suo motu disallowance. So, in the absence of satisfaction recorded by AO, mechanical invoking of provisions contained under section 14A read with rule 8D was not permissible in view of mandate laid down under section 14A(2). Therefore, additional disallowance was deleted.
Followed:Maxopp Investment Ltd. v. CIT (2012) 347 ITR 272 (Del) : 2011 TaxPub(DT) 2171 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 36(1)(va) Section 43B, Proviso
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