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2016 (5) TMI 1540 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - mandation of recording satisfaction - HELD THAT:- As we come to ‘satisfaction’ aspect as mandated under section 14A(2) r.w. Rule 8D of the Income Tax Rules there is no dispute that the Assessing Officer in his assessment order does not record the same so as to dispute assessee’s books of accounts recording no expenditure incurred for exempt income. CIT(A) upholds Assessing Officer’s findings by observing that such a satisfaction need not be explicitly mentioned in assessment order as it can be deduced from the order itself. We find it to be not in tune with the specific provision in the act under section 14A(2). The legislature in its wisdom specifically envisages Assessing Officer’s satisfaction before invoking expenditure disallowance that an assessee’s books are not correct so far as they do not record any expenditure. We quote this statutory provision as well as the above stated case law that there has to be an explicit satisfaction and an Assessing Officer cannot simply brush aside the relevant books of accounts. Any violation thereof, in our considered opinion, would violate the legislative intent as well the legislation itself. CIT(A)’s reasoning goes contrary to section 14A(2) as interpreted by various high courts hereinabove. The impugned administrative expenditure disallowance made by both the lower authorities under Rule 8D(iii) is accordingly deleted. Assessee’s appeal is allowed.
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