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2018 (4) TMI 1766 - ITAT MUMBAIDisallowance u/s 14A r.w. Rule 8D - AO non arriving at a satisfaction as regards the correctness of the claim of the assessee, on the basis of its accounts - HELD THAT:- The very process of determination of the amount of expenditure incurred in relation to exempt income would be triggered only if the A.O. returns a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. A.O before discarding the claim of the assessee as regards the amount of expenditure incurred in relation to the exempt income, as per the mandate of law, remains under a statutory obligation to record cogent reasons as regards his dissatisfaction in respect of such claim of the assessee, before determining the amount of disallowance in accordance with the method prescribed in Section 14A r.w. Rule 8D. We find that our aforesaid view stands fortified by case of Godrej & Boyce Manufacturing Company Limited [2017 (5) TMI 403 - SUPREME COURT] A.O had failed to satisfy the statutory requirement of arriving at a satisfaction, that having regard to the accounts of the assessee, as placed before him, it was not possible for him generate the requisite satisfaction with regard to the correctness of the claim of disallowance made by the assessee under Sec. 14A - A.O had failed to record the requisite satisfaction, therefore, the very assumption of jurisdiction by him for dislodging the claim of disallowance made by the assessee and substituting the same by the amount worked out as per Sec. 14A r.w Rule 8D cannot be sustained - Decided in favour of assessee.
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