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2014 (4) TMI 1287 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - assessee has submitted that neither the assessee had earned any exempt income nor any expenditure had been incurred for earning of the exempt income - HELD THAT:- As in the case of Godrej & Boyce Manufacturing Co. Ltd.[2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable but can be applied only if the assessee's method is not satisfactory. It has been further held that Rule 8D is not retrospective and applies from A.Y. 2008-09. As further observed that u/s 14A resort can be made to Rule 8D of the Income Tax Rules for determining the amount of expenditure in relation to exempt income, if, the AO is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. A perusal of the assessment order reveals that the AO without recording any dissatisfaction with regard to the claim of the assessee that no expenditure was incurred by the assessee for earning the exempt income, straightway applied Rule 8D against the mandate of the provisions of section 14A - CIT(A) also ignored the contentions raised by the assessee while confirming the disallowance. We restore this issue back to the file of the AO with a direction that the AO will examine the contentions of the assessee made in this regard. AO will be at liberty to call for any record/evidences or statement etc. from the assessee as may be required by him for deciding the issue under consideration. After going through the details provided by the assessee, if the AO will be satisfied with the contentions or working, if any, made by the assessee then he will assess the income accordingly - if the AO does not agree with the computation made by the assessee and in that event, he will have to record his dissatisfaction with reasoning for the same by way of a speaking order, then he will be at liberty to resort to the provisions of Rule 8D. Needless to say, the assessee will co-operate and promptly supply the necessary details etc. to the AO for deciding the issue under consideration. Appeal of the assessee is allowed for statistical purposes.
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