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| The Tax Publishers2019 TaxPub(DT) 3124 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A(2)
AO had not recorded any satisfaction having regard to accounts of assessee with regard to claim of assessee that no expenditure was incurred for earning exempt income in terms of section 14A(3) read with rule 8D(1) and without recording any subjective satisfaction with cogent reasons, AO could not proceed to make disallowance under section 14A by adopting computation mechanism provided in rule 8D(2), accordingly, disallowance was deleted.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Non-recording of satisfaction having regard to assessee's accounts
Assessee earned tax free dividend income but claimed no suo moto disallowance under section 14A. AO invoked rule 8D on the ground that assessee was not able to prove the fact that it had not incurred towards earning exempt income and accordingly, AO worked out disallowance. Held: AO had not recorded any satisfaction having regard to accounts of assessee with regard to claim of assessee that no expenditure was incurred for earning exempt income in terms of section 14A(3) read with rule 8D(1) and without recording any subjective satisfaction with cogent reasons, AO could not proceed to make disallowance under section 14A by adopting computation mechanism provided in rule 8D(2), accordingly, disallowance was deleted.
Followed:Maxopp Investment Ltd. v. CIT (2018) 402 ITR 640 (SC) : 2018 TaxPub(DT) 1403 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
INCOME TAX ACT, 1961
Section 143(3)
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