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2015 (4) TMI 477 - AT - Income TaxDisallowance of expenses made u/s 14A - held that:- Provisions of Rule 8D are applicable for this assessment year for making any disallowance under Section 14A of the Act. However, the provisions of Section 14A are triggered when the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of expenditure claimed to have been incurred in relation to income, which does not form part of the total income under the Act. Section 14A(2) categorically provides that the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, "if the Assessing Officer, having regard to the accounts of the assessee, 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 the total income under this Act". No satisfaction was recorded to satisfy the mandate of sub-sections (2) and (3) of Section 14A. The position continued to remain same before the learned CIT(A) as well, who also simply upheld the view taken by the Assessing Officer without making good the deficiency left by the Assessing Officer. The position which, therefore, emerges is that neither the Assessing Officer nor the learned CIT(A) recorded the requisite satisfaction as required under Section 14A. In the absence of such satisfaction, there can be no disallowance as per Section 14A. In these peculiar facts when there is a deficiency in recording satisfaction, much less a proper satisfaction, in terms of sub-section (3) read with sub-section (2) of section 14A, we hold, that no disallowance could have been made or sustained on this score. As such, we order for deletion of addition of ₹ 3.78 lac made under Section 14A of the Act. - Decided in favour of assessee.
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