TMI Blog2021 (3) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to income which does not form part of total income, the Assessing Officer has to, before making any disallowance u/s. 14A of the Act, record his satisfaction giving reason for not agreeing the claim of the assessee. The reasons, satisfaction recorded must justify the ground on which the claim of the appellant is not accepted. Reliance is placed on the decision of Delhi High Court in the case of Maxopp Investments.[ 2011 (11) TMI 267 - DELHI HIGH COURT] .Without prejudice to the above the disallowance u/s. 14A cannot exceed the exempt income - we are unable to agree with the inference of the Assessing Officer and decline to interfere with the order of the ld. CIT(A). Correct head of income - Lease Rentals - AO held that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the ld. CIT(A)-18, New Delhi dated 08.05.2017. 2. Following grounds have been raised by the revenue: 1. Whether on the facts circumstances of case, the ld. CIT(A) is correct in deleting the disallowance u/s. 14A of ₹ 26,87,782/- ignoring the fact that the disallowance u/s. 14A is not dependent on the exempt income earned during the year? 2. Whether on the facts circumstances of case, the ld. CIT(A) is correct in deleting the disallowance of expenses claimed against lease rent of ₹ 2,15,51,400/-. Disallowance u/s. 14A: 3. On the facts of the case, the ld. CIT(A) deleted the addition made by the AO u/s. 14A of the Income Tax Act, 1961 on the grounds that the assessee has earned tax free dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act the appellant did not make any net fresh investment during the year under consideration. It only sold the current investment held in mutual funds which was duly reported in the financial statement of the appellant company. 3. The appellant cited the judicial pronouncements of Bombay High Court in 313 ITR 340 wherein the Hon'ble Court has held that even if the appellant had borrowed funds during the year, but otherwise had sufficient interest free funds available to meet, investment it can be presumed that investment were made from interest free funds........ 6. There must be actual incurring of expenditure and the expenditure must have clear relationship with exempt income. Section 14A cannot be invoked to disallow expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that the revenue having accepted all along that the lease rental income earned as business income cannot suddenly change the tract and consider the business income as income from other sources. The ld. CIT(A) held that it becomes all the more relevant when the exercise to changes the heads business or other sources is purely academic having no impact on the revenue. The Assessing Officer has not brought out any new facts or circumstantial to justify the change in opinion regarding head of income. Therefore, disallowance made by the AO in the impugned order is deleted. 10. Having gone through the rationale given by the Assessing Officer which is not the correct position of the law, the order of the ld. CIT(A) giving relief based on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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