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2017 (11) TMI 447 - AT - Income TaxAddition u/s 14A r.w.r. 8D - nexus of certain expenses incurred by the assessee with the earning of the exempt income - Held that:- In the case of the present assessee the A.O had carried out the disallowance under Sec. 14A, in terms of the methodology provided in Rule 8D(2)(iii), only on the basis of a general observation that a plausible nexus of certain expenses incurred by the assessee with the earning of the exempt income could not be ruled out. We are of the considered view that the aforesaid general observation of the A.O can by no means partake the color and character as that of a satisfaction, which as per the mandate of law is required to be arrived at by him with regard to the correctness of the claim of the assessee in respect of the expenses claimed to have been incurred in respect of income which did not form part of the total income of the assessee, having regard to the accounts of the assessee, as were placed before the A.O. We thus being of the considered view that as the A.O had summarily carried out the disallowance contemplated under Sec. 14A, as per the methodology provided in Rule 8D(2)(iii), without satisfying the statutory requirement of first arriving at a satisfaction as required by the mandate of law, having regard to the accounts of the assessee as placed before him, therefore, we are unable to persuade ourselves to uphold the disallowance of ₹ 10,00,000/- which had been sustained by the CIT(A). The order of the CIT(A) sustaining the disallowance of ₹ 10,0,000/- under Sec. 14A is thus set aside. - Decided in favour of assessee.
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