|The Tax Publishers2020 TaxPub(DT) 5410 (Mad-HC)
INCOME TAX ACT, 1961
Section 14A Rule 8D
AO without recording satisfaction for invoking section 14A, cannot proceed to make disallowance under section 14A with respect to expenditure incurred by assessee.
Disallowance under section 14A - Expenditure against exempt income - No satisfaction recorded by AO -
Assessee filed appeal against the order of Tribunal confirming disallowance made by the AO under section 14A, in respect of the strategic investment made by assessee without recording satisfaction for invoking section 14A. Held: The controversy involved in the present appeals was covered by a case of Marg Limited v. CIT, Chennai [TCA Nos. 41 to 43 of 2017, decided on 30-9-2020], wherein it was held that the provisions of section 14A themselves are very clear and without recording satisfaction by the assessing authority that the expenditure incurred to earn exempted income, as computed by the assessee was not acceptable for the specified reasons, the assessing authority cannot even resort to computation of such disallowance under rule 8D of the Rules. Thus, following the same the issue was set aside and the appeals were restored to the file of Tribunal to decide the appeals de novo afresh, in accordance with the law laid down by High Court in the judgment in Marg Limited v. CIT [TCA Nos. 41 to 43 of 2017, decided on 30-9-2020].
Followed:Marg Limited v. CIT [TCA Nos. 41 to 43 of 2017, Decided on 30-9-202].
FAVOUR : Matter remanded.
A.Y. : 2008-09 to 2010-11
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