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| The Tax Publishers2020 TaxPub(DT) 4631 (Mum-Trib) : (2021) 187 ITD 0065 : (2020) 084 ITR (Trib) 0164 INCOME TAX ACT, 1961
Section 14A(2)
In the absence of recording of dissatisfaction as regards correctness of assessee's claim under section 14A, invocation of rule 8D was in contraction of mandate laid down under section 14A(2) and, 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 as regards correctness of assessee's claim under section 14A
Assessee earned tax-free dividend income and claimed suo moto disallowance under section 14A @ 20% of total expenditure as attributable to exempt income. AO invoked rule 8D and worked out additional disallowance. Assessee challenged this on the ground of non-recording of satisfaction by AO.Held: AO nowhere recorded satisfaction to arrive at the conclusion of reasonable expenditure incurred to earn exempt income. No books of accounts were examined in this regard. Accordingly, invocation of rule 8D was in contraction of mandate laid down under section 14A(2) and, therefore, additional disallowance was deleted.
Relied:India Advantage Securities Ltd. (1131 of 2013) dt. 13-4-2015 : 2015 TaxPub(DT) 2187 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, MUMBAI BENCH
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