The Tax Publishers2020 TaxPub(DT) 4854 (Del-Trib)

INCOME TAX ACT, 1961

Section 14A

Since without recording any satisfaction to correctness of claim of assessee, AO proceeded to apply provisions of rule 8D for disallowances under section 14A, thus, action of AO was against mandate of provisions of section 14A(2) because recording of satisfaction about the correctness of the claim of the assessee with respect to examination of accounts is the primary conditions to invoke any disallowance under section 14A.

Disallowance under section 14A - Expenditure against exempt income - Suo moto disallowance offered by assessee rejected by AO - Non-recording of satisfaction by AO as regards correctness of assessee's claim

Assessee challenged disallowance made by AO under section 14A by contending that before rejecting suo moto disallowance offered by assessee, AO did not record his satisfaction to the correctness of assessee's claim. Held: AO without recording any satisfaction to correctness of claim of assessee, proceeded to apply provisions of rule 8D for disallowances under section 14A. Action of AO was against mandate of provisions of section 14A(2) as recording of satisfaction about the correctness of the claim of the assessee with respect to examination of accounts is the primary conditions to invoke any disallowance under section 14A. Thus, AO was directed to delete the disallowance.

Distinguished:Joint Investments Pvt. Ltd. v. CIT 2015 TaxPub(DT) 1375 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12


INCOME TAX ACT, 1961

Section 36(1)(iii)

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