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2016 (7) TMI 387 - ITAT DELHIDisallowance u/s 14A - Held that:- For making any disallowance u/s 14A of the Act the AO shall determine the amount of total expenditure incurred by the assessee which does not form part of total income under his Act in accordance with such method as may be prescribed i.e. under Rule 8D of the Income Tax Rule, 1962. At the same time second subsequent part of sub section (2) of Section 14A of the Act imposes precondition that before such determination of disallowance the AO has to record that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of total income under the Act. But this mandatory requirement, if not fulfilled by the AO, cannot be done, to fill – omission of the AO before the CIT(A). It is also pertinent to note that in the present case the assessee suo moto disallowed ₹ 31553/- and the AO has not recorded any finding to show that he is not satisfied with the correctness of the claim as well as suo moto disallowance, made by the assessee and thus the authorities below cannot validly make any disallowance and consequent addition u/s 14A Respectfully following the decision of Hon’ble Jurisdictional High Court of Delhi in the case of Cheminvest Ltd. ( 2015 (9) TMI 238 - DELHI HIGH COURT ), we hold that no disallowance u/s 14A of the Act can be made where there is no exempt income. - Decided in favour of assessee
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