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2017 (12) TMI 738 - AT - Income TaxAddition u/s 14A r.w.r. 8D - Held that:- The provisions of Section 14A(2) empower the AO to resort to the prescribed provision under Rule 8D for making disallowance under Section 14A where, having regard to the account of the assessee, the AO is not satisfied with the claim of the assessee. We further note that the Hon’ble Mumbai High Court in the case of CIT Vs Godrej & Boyce Mfg Co ltd vs. DCIT, Mumbai [2010 (8) TMI 77 - BOMBAY HIGH COURT] and the Hon’ble Delhi High Court in the case of Maxopp Investment [2011 (11) TMI 267 - Delhi High Court] have held that such a lack of satisfaction should be on cogent grounds. Such provisions entailed in Section 14A are in the nature of safeguards with the intention to provide natural justice to the taxpayers before invoking the prescribed method which is only presumptive in nature. We find that in the instant case, even though the AO has given due opportunity to the assessee to explain its claim that only an amount of ₹ 17,20,346 was in the nature of expenses incurred for earning tax exempt income, however, he was not judicious in examining the claim and dismissed the same as such without any cogent reasoning or any sound basis. The assessee had given detailed explanation in respect of interest expenses and in the absence of identifying any specific expenses incurred for earning the exempt income, had disallowed relevant administrative expenses proportionately on turnover basis. No fault could be pointed out by the AO in it. In view of the above, we find that the Ld. CIT(A) has rightly held that the action of the AO of invoking the provisions of Rule 8D without on any cogent ground was unwarranted and not sustainable. - Decided against revenue.
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