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2017 (8) TMI 717 - AT - Income TaxAddition u/s 14A - applying the formula contained in Rule 8D - satisfaction contemplated u/s 14A(2) to make the addition - Held that:- There is no reference to any of the fact-situation or any credible reasoning or material by the Assessing Officer before rejecting the plea of the assessee and proceeding to determine the disallowance by applying the formula contained in Rule 8D of the Rules. In fact, the phraseology of Sec. 14A itself specifies that the satisfaction contemplated is required to be arrived at “having regard to the accounts”, an approach which is conspicuous by its absence in the present case. In view of such an inadequacy in the action of the Assessing Officer, it has to be held that the satisfaction contemplated u/s 14A(2) of the Act has not been recorded by the Assessing Officer and thus, he has failed to comply with the condition precedent before embarking on applying the formula contained in Rule 8D of the Rules in order to compute the disallowance u/s 14A of the Act. Thus, in our considered opinion, on this aspect itself, the determination of disallowance made by the Assessing Officer is untenable. We find that in its written submissions made to the Assessing Officer during the assessment proceedings, copies of which are placed in the Paper Book, assessee had explained the manner and justification for estimating such expenditure at ₹ 57,790/- and there is nothing on record to suggest as to why the same has been disregarded by the Assessing Officer. Therefore, in consequence, it has to be held that the disallowance of ₹ 9,95,080/- made by the Assessing Officer over and above the suo motu disallowance made by the assessee is unjustified and is directed to be deleted. - Decided in favour of assessee.
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