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2019 (10) TMI 466 - AT - Income TaxDisallowance u/s 14A read with rule 8 D - non recording of proper satisfaction - HELD THAT:- Assessee has specifically stated that it has not incurred any expenditure to earn exempt income. The assessee further submitted before the AO the details of each and every expenditure out of ₹ 1118354/- which has been debited in the books of account. The nature of expenditure shown by the assessee in the income and expenditure clearly shows that the major expenditure is of donation of ₹ 801000/- and deprecation of ₹ 1,99,694/-. All other expenditure in the form of insurance, books, audit fees, subscription and telephone etc , each of them being less than ₹ 20000/- was claimed. AO without pointing out any instance of expenditure incurred by the assessee with regard to books of account of the assessee, adopted the disallowance computation u/r 8D of the IT Rules. Ld AO could not show that any of the expenditure is incurred for earning exempt income. Claim of the assessee that he has not incurred any expenditure for earning exempt income is correct. AO did not dispute this fact but applied the provisions of Rule 8D of the Income Tax Rules, 1962. Satisfaction is not the proper satisfaction recorded by the ld AO for invoking Rule 8D. Further, the ld CIT (A) also did not appreciate this argument in proper perspective and erroneously held that ld AO has correctly recorded the satisfaction. Further ld CIT (A) has also confirmed the addition merely because the assessee has accepted the order of the ld CIT (A) for earlier years. According to us merely on this basis, disallowance cannot be confirmed in this year. There may be innumerable reasons with the assessee to not to agitate an issue in one year but to agitate it in another year. Merely that cannot be a ground to confirm the disallowance. Accordingly, we direct the ld AO to delete the disallowance u/s 14A of the Act read with Rule 8D - Decided in favour of assesee.
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