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2017 (9) TMI 831 - AT - Income TaxAddition u/s 14A read with Rule 8D - AO made disallowance without recording his dissatisfaction on any cogent ground - Held that:- The findings returned by AO that, “balance disallowance to the tune of ₹ 6,41,37,885/- needs to be disallowed as per Rule 8D” are not sustainable in the eyes of law as there is not an iota of reasons of dis-satisfaction recorded by AO as to work out of disallowance of ₹ 1,63,779/- voluntarily made by the assessee itself because sub-section (2) & (3) of section 14A with Rule 8D of the Rules has only prescribed a formula for determination of an expenditure to earn the income which does not form part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee. The assessee has come up with specific argument that it has not incurred any interest cost for earning exempt income but this plea of the assessee has also been brushed aside by the AO without recording any reason of dis-satisfaction. Moreover, when the assessee is having ample cost free funds to the tune of ₹ 6049.43 crores and had not made investment to earn exempt income as on 31.03.2011, but in its subsidiaries for commercial expediency, the question of disallowance under Rule 8D does not arise. AO has made disallowance without recording his dissatisfaction on any cogent ground and without disputing the computation of disallowance made by the assessee itself rather subjectively written that, “the balance disallowance was to be worked out in view of the provisions contained u/s 14A read with Rule 8D” which is not sustainable in the eyes of law. - Decided in favour of assessee.
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