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| The Tax Publishers2021 TaxPub(DT) 4410 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D(2)
There was absolutely no satisfaction recorded by AO in his assessment order as to how voluntary disallowance made by assessee under section 14A was incorrect having regard to the correctness of the accounts of the assessee. Such satisfaction was mandated to be recorded in terms of section 14A(2) read with rule 8D(1). Non-recording of such mandatory satisfaction on an objective basis with cogent reasons would make the entire addition illegal.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Non-reording 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 satisfaction by AO. Held: There was absolutely no satisfaction recorded by AO in his assessment order as to how voluntary disallowance made by assessee under section 14A was incorrect having regard to the correctness of the accounts of the assessee. Such satisfaction was mandated to be recorded in terms of section 14A(2) read with rule 8D(1). Non-recording of such mandatory satisfaction on an objective basis with cogent reasons would make the entire addition illegal.
Relied:Maxoop Investments (2018) 402 ITR 640 (SC) : 2018 TaxPub(DT) 1403 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11, 2011-12 & 2012-13
INCOME TAX ACT, 1961
Section 36(1)(vii)
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