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2019 (4) TMI 354 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - voluntary disallowance by assessee - recording of satisfaction - HELD THAT:- Out of the remaining expenses of ₹ 10.90 lacs, the tax-payer further voluntarily disallowed an amount of ₹ 5.45 lacs as an expenditure incurred in relation to earning of an exempt income within contemplation of Section 14A, which was 50% of the expenses claimed by the tax-payer. Revenue went ahead and disallowed ₹ 2.41 crores u/s 14A albeit the tax-payer never claimed expenses of that magnitude. AO did not recorded any satisfaction as to what is basis of disallowing expenses to the tune of ₹ 2.41 crores u/s 14A while the total expenses debited to Profit and Loss Account (net of voluntary disallowance of ₹ 4.13 lacs) was only ₹ 10.90 lacs. Based on peculiar factual matrix of the case, the said appeal was decided by tribunal vide its order dated 08.05.2018 wherein suo moto disallowance of 50% of the total expenses offered for disallowance u/s 14 by the tax-payer voluntary in the return of income filed with the Revenue was accepted by the tribunal, while the factual matrix in assessee’s case is entirely different as we have discussed in details in preceding para’s of this order. Based on our detailed discussions in the preceding para’s of this order, we are restoring the issue back to the file of the AO for fresh adjudication of disallowance of expenditure incurred in relation to the earning of an income which does not form part of the total income having regard to the accounts of the assessee. The assessee is directed to produce before the AO for verification its working of computing disallowance of expenses u/s 14A being incurred in relation to earning of an exempt income having regard to accounts of the assessee. The assessee is also directed to produce before the AO complete details as to how its investments portfolio in securities is managed and handled. AO shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. The evidences/explanations submitted by the assessee shall be admitted by the AO and shall be adjudicated on merits in accordance with law. This disposes of ground no. 1 to 7 raised by the assessee in its memo of appeal filed with tribunal
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