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| The Tax Publishers2020 TaxPub(DT) 0510 (Del-Trib) INCOME TAX ACT, 1961
Section 14A(2)
It was incumbent upon AO to record satisfaction as to working given by assessee that no expenses had been incurred by it to earn dividend income'. As AO failed to do so, invocation of rule 8D was not in accordance with mandate laid down under section 14A(2) and, therefore, disallowance was deleted.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Non-recording of satisfaction by AO
Assessee earned tax free dividend income but claimed no suo moto disallowance under section 14A. AO invoked rule 8D(2) and worked out disallowance. assessee's case was that AO failed to record satisfaction as required under section 14A(2) that working given by assessee was not correct.Held: It was incumbent upon AO to record satisfaction as to the working given by assessee that no expenses had been incurred by it to earn dividend income'. As AO failed to do so, invocation of rule 8D was not in accordance with mandate laid down under section 14A(2) and, therefore, disallowance was deleted.
Relied:Maxopp Investment Ltd. v. CIT (2011) 347 ITR 272 (Del.) : 2011 TaxPub(DT) 2171 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 36(1)(iii)
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