Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (1) TMI 218 - AT - Income TaxDisallowance under section 14A in respect of dividend income - Held that:- The satisfaction of the Assessing Officer in this regard must be arrived at on an objective basis. The Assessing Officer cannot straight away proceed to apply rule 8D, without examining the merits of the assessee’s claim, in respect of the expenditure disallowed by it under section 14A of the Act. For rejecting the correctness of the claim of the assessee, the Assessing Officer is required to give a reasoned finding that the expenditure or no expenditure disallowed by the assessee, is incorrect. We observe that in the present case the required exercise has not been done by the Assessing Officer before making disallowance by invoking the provisions of section 14A r.w. Rule 8D. The assessee has further contended that the assessee is having both interest bearing funds as well as own funds. However, the investment has been made from own funds. In case assessee’s own funds are in excess of the investment made, then it has to be presumed that the investments have come from the interest-free funds available with the assessee. This view is supported by the decision rendered by the Hon’ble Bombay High Court, in the case of CIT Vs HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT). In the instant case, the Assessing Officer has mechanically applied the provisions of section 14A read with Rule 8D without recording satisfaction or rejecting the claim of the assessee by giving any cogent reason. The Assessing Officer has failed to ascertain from records the source of investment made in the mutual funds by the assessee. - Decided in favour of assessee
|