The Tax Publishers2020 TaxPub(DT) 1730 (Mum-Trib)

INCOME TAX ACT, 1961

Section 14A(2)

Where AO after reproducing extracts of assessee\s submission negated contention of assessee by expressing his view and made additional disallowance under rule 8D(2) assessee's contention that AO had not recorded satisfaction before rejecting assessee's method of computation of suo motu disallowance did not deserve acceptance because manner of recording satisfaction under section 14A read with rule 8D(2) is subjective and there is no specified method or performa for recording of satisfaction by AO.

Disallowance under section 14A - Expenditure against exempt income - Assessee alleged non-recording of satisfaction by AO - AO after reproducting extracts of assessee's submission negated contention of assessee by expressing his view in assessment order

Assessee earned tax free dividend income and made suo moto disallowance under section 14A. AO after reproducing extracts of assessee\s submission negated contention of assessee by expressing his view and made additional disallowance under rule 8D(2). Assessee challenged this on the ground that before rjecting assessee's computation of disallowance under rule 8D, had not recorded satisfaction in terms of section 14A(2).Held: The manner of recording satisfaction under section 14A read with rule 8D(2) is subjective. There is no specified method or performa for recording of satisfaction by AO. If AO has recorded his express satisfaction in whatsoever manner in rejecting assessee's suo moto disallowance, the condition as envisaged in section 14A(2) is complied with. Accordingly, assessee's contention that AO had not recorded satisfaction before rejecting assessee's method of computation of suo motu disallowance did not deserve acceptance.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2010-11


INCOME TAX ACT, 1961

Section 14A Rule 8D(2)(ii)

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