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2021 (1) TMI 530 - ITAT DELHIDisallowance u/s 14A - Assessee has come up with specific plea that for earning exempt dividend income, it has not incurred any expenditure, hence no suo motu disallowance has been made - HELD THAT:- When we examine the order passed by the AO we find that he has proceeded on the premise that since the assessee has earned huge dividend income, some expenditure would have been incurred for earning the same. AO has accepted the audited books of account maintained by the assessee company which is a Government undertaking. When it is undisputed fact on record that assessee company being a Government undertaking has made investment in specific Government securities and moreover substantial portion of investments is coming from earlier years, no question arises to incur separate expenses. In order to invoke the provisions contained u/s 14A read with Rule 8D(2)(iii), the AO is mandatorily required to record his dissatisfaction that claim of the assessee as to not incurring any expenses is not correct. So, without recording proper satisfaction, disallowance under Rule 8D is not sustainable. AO without bringing on record an iota of evidence if assessee has incurred expenses to earn the dividend income proceeded to invoke the provisions contained under section14A r/w Rule 8D(2)(iii) mechanically which is not permissible. Addition of expenditure made towards Corporate Social Responsibility (CSR) and sustainable development - HELD THAT:- Expenses claimed by the assessee company have been incurred as per guidelines of the Ministry concerned with approval of the Board to the best business interest of the assessee company. So AO, without examining the nature of the expenses, disallowed the claim mechanically even by ignoring the rule of consistency. Moreover, CSR expenses have been incurred by the assessee on the direction of the Government of India and identical issue has been decided by the coordinate Bench of the Tribunal in case of M/s. HLL Lifecare Ltd. [2018 (6) TMI 552 - ITAT COCHIN] - no illegality or perversity in the findings returned by the ld. CIT (A) in deleting the addition made by the AO on account of disallowance of CSR expenditure - Decided in favour of assessee.
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