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| The Tax Publishers2020 TaxPub(DT) 0189 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A
Where AO had made addition by rejecting disallowance offered by assessee under section 14A, the disallowance was reversed because the AO had failed to record reasons as to why the voluntary disallowance offered by the assessee was not correct, so as to invoke provisions of rule 8D of Income Tax Rules, 1962.
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Disallowance under section 14A - Non-recording of reasons by AO for rejecting suo-motu disallowance offered by assessee - Validity of -
Assessee-company had earned exempt dividend income and offered disallowance under section 14A in relation to expenditure incurred for earning such exempt income. AO rejected disallowance offered by the assessee and enhanced the amount of disallowance in assessment order. Held: AO had failed to record necessary satisfaction as to why suo-moto disallowance made by the assessee was not correct and in the absence of the same, there was no merit in the disallowance worked out by the AO by invoking provisions of rule 8D(iii) of Income Tax Rules, 1962. Therefore, the disallowance made under section 14A(2) was reversed.
Followerd:Maxopp Investment Ltd. v. CIT -I vs. D.B. Corp Ltd. (2018) 402 ITR 640 (SC) : 2018 TaxPub(DT) 1403 (SC) Tech-Process Payment Services Ltd. v. DCIT [ITA No. 7026/MUM/2016, dt. 15-2-2019] Tech-process Payment Services Ltd. v. DCIT [ITA No. 8547/Mum/2011, 8576/Mum/2011, 5395/Mum/2013(Assessment Year 2008-09 and 2009-10), dt. 12-10-2018] Tech-process Payment Services Ltd. v. DCIT [I.T.A. No. 589/Mum/2015, dt. 14-9-2016]
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2012-15
IN THE ITAT, MUMBAI BENCH
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