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2018 (5) TMI 2118 - AT - Income TaxAddition u/s 14A r.w.r. 8D - CIT(A) upheld the disallowance made by the AO rejecting the contention of assessee that in view of non-recording of satisfaction by the Assessing Officer, there was no merit in the disallowance made - HELD THAT:- The requirement of section 14A(1) of the Act is that in case where the assessee has earned exempt income which is not taxable in the hands of assessee, then the Assessing Officer has to record satisfaction as per sub-section (2) of section 14A of the Act to come to a finding as to the applicability of provisions of section 14A(1) of the Act. In the absence of recording requisite satisfaction by the AO, no disallowance can be made under section 14A of the Act. We find that similar issue has been considered by the Tribunal in the case of KPIT Technologies Ltd [2018 (4) TMI 863 - ITAT PUNE], wherein reliance was placed on the ratio laid down by the Hon'ble Supreme Court in Godrej & Boyce Manufacturing Company Ltd. (supra) and also in Maxopp Investment Ltd. [2017 (5) TMI 403 - SUPREME COURT] In the facts of the present case, where the AO has failed to record satisfaction before invoking the provisions of section 14A(1) of the Act, we find no merit in the disallowance worked out by the Assessing Officer and we reverse the same. The disallowance made by the Assessing Officer in this regard, is thus deleted. Assessee appeal allowed.
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