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2020 (2) TMI 83 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D(2)(iii) - assessee has suo moto made the disallowance - HELD THAT:- In this case undisputedly the AO has recorded general satisfaction as is apparent from the perusal of the assessment order particularly para 3.3 and thus AO has failed to record any objective satisfaction after having considered the books of accounts and also point out as to how the suo motto disallowance made by the assessee is wrong by referring to the books of accounts of the assessee. Therefore, in our opinion, the AO has failed to meet the conditions precedent for invocation of provisions u/s 14A r.w. Rule 8D. The case is squarely covered by the decision of H.T. Media Ltd. [2017 (8) TMI 962 - DELHI HIGH COURT] as that AO is required to examine the books of accounts first and record his satisfaction as to how the disallowance made by the assessee, is wrong as per the mandate of section of 14A(2) of the Act r.w. Rule 8D(1)(a) of the Rules. Accordingly, we are not in agreement that the conclusion made by the ld. CIT(A) and the order of ld. CIT(A) on this issue cannot be sustained. We therefore set aside the order of CIT(A) and direct the AO to delete the disallowance made under Rule 8D(2)(iii). Disallowance under Rule 8D(2)(ii) of the Rules - CIT-A deleted the addition - HELD THAT:- In this case, we find that ld. CIT(A) has recorded the findings of the fact that the assessee’s interest after setting off the interest expenditure with interest income therefore no interest expenditure is called for disallowance. Besides the ld. CIT(A) has recorded a finding of fact that borrowed funds were raised for advancing loans and earning taxable interest income. Moreover we have decided that AO has not recorded any objective satisfaction before invoking provisions of section 14A r.w.r. 8D and on this count of also the addition will not survive. Accordingly we dismiss the Ground No.1 of the Revenue. Disallowance of professional fees paid to Mr. Arata Nambu - CIT-A deleted the addition - HELD THAT:- As decided in own case [2019 (9) TMI 1312 - ITAT MUMBAI] documentary evidence which had been relied upon by the ld. AR to support the aforesaid claim of expenses debited by the assessee in its profit and loss account for the year under consideration, had neither been dislodged by the lower authorities, nor anything proving to the contrary had been placed on our record by the ld. LD.DR in the course of the hearing of the appeal. Accordingly, finding no force in the claim of the Revenue that the CIT(A) was in error in deleting the disallowance of the consultancy charges paid by the assessee company to Mr. Arata Nambu - decided against revenue Payment of commission - CIT(A) directed the assessee to produce relevant supporting evidences before the AO and the AO to allow the claim after verifying the evidences produced by the assessee - HELD THAT:- We note that this is not a case of set aside as has been contended by the Revenue as the ld. CIT(A) has recorded finding of facts that the issue in hand is identical to one as decided by CIT(A) in A.Y 2009-10 and is allowable during the year also but directed the AO to verify the evidences which the assessee may produce and allow the claim. Therefore we do not find any merit in the ground of the Revenue.
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