Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (8) TMI 80 - AT - Income TaxDisallowance u/s 14A - Assessee argued that A.O. has not recorded satisfaction before invoking the provisions of Rule 8D - HELD THAT:- A perusal of assessment order would show that the A.O. has discussed the applicability of the provisions of section 14A of the Act by duly considering the letters filed by the assessee before him. Hence, it is not a case of non-recording of dissatisfaction over the claim made by the assessee, as contended by Ld A.R. It is pertinent to mention here that the Act does not prescribe any particular method for recording satisfaction/dissatisfaction. Hence the satisfaction/dissatisfaction of the AO over the claim made by the assessee should be inferred from the observations made by him in the assessment order. A.O. has made detailed discussion in all the years under consideration on the applicability of sec.14A of the Act, that too, after considering the letter filed by the assessee. Meaning thereby, the assessing officer has shown that he was not satisfied with the claim of the assessee. Accordingly, we do not find any merit on the legal issue urged by the assessee. Accordingly, we reject the legal ground relating to recording of satisfaction/dissatisfaction by the A.O. Disallowance under Rule 8D(2)(ii) - Assessee has floated many sister concerns and there has been transfer of funds (interest free) between the sister concerns. Hence the assessee has shown both interest free funds received from the sister concerns and also advances given to other sister concerns in the above statement. A perusal of the above statement would show that the own funds and interest free funds available with the assessee are in excess of the value of investments in subsidiaries/related concerns and interest free advances given by the assessee. Hence, as per the decision rendered in the case of CIT Vs. Micro Labs Ltd. [2016 (4) TMI 219 - KARNATAKA HIGH COURT] no disallowance out of interest expenditure is called for under Rule 8D(2)(ii). Disallowance of “other expenses” under Rule 8D(2)(iii) - It is the case of the assessee that it has received exempt income only from one/two partnership concerns - as submitted that, for the purpose of computing average value of investments, only those investments which have yielded exempt income should be considered. This contention of the assessee gets support from the decision rendered in the case of Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI]. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in all the years under consideration and direct the A.O. to recompute disallowances under Rule 8D(2)(iii) by considering only those investments, which have yielded exempt income for the purpose of computing average value of investments. In case the disallowance computed as per above formula works out to less than ₹ 5.00 lakhs in AY 2016-17, then the disallowance shall be made at the amount of ₹ 5.00 lakhs voluntarily disallowed by the assessee in that year.
|