Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 1096 - AT - Income TaxDisallowance u/s 14A - Sufficiency of own funds - validity of the jurisdiction assumed by the A.O as regards the satisfaction recorded by him - simpliciter rejection by the AO - as submitted by the assessee that as it had sufficient non-interest bearing funds available with it throughout the year which were far much higher than the investments made in the exempt income yielding securities, therefore, no part of the interest expenditure claimed as deduction was liable to be disallowed - HELD THAT:- A.O on the basis of his general observations had dislodged the claim of the assessee that no expenditure was incurred for earning of the exempt dividend income and had worked out the disallowance u/s 14A r.w. Rule 8D. As per observation made in case GODREJ & BOYCE MANUFACTURING COMPANY LIMITED VERSUS DY. COMMISSIONER OF INCOME-TAX & ANR. [2017 (5) TMI 403 - SUPREME COURT] we are of the considered view, that the issue that an A.O before taking recourse to the provisions of Sec. 14A(2) and (3) r.w Rule 8D of the Income Tax Rules 1963, is statutorily obligated to give a clear finding with reference to the assessee”s accounts as to how the expenditure claimed by the assessee in respect of its non-exempt income were related to the exempt income; is no more res-integra pursuant to the aforesaid judgments of the Hon”ble Apex Court. The failure on the part of the A.O to strictly comply with the aforesaid statutory obligation that was cast upon him, can safely be gathered from the fact that there is no clear finding by him with reference to the assessee”s accounts, as to how to the other expenditure claimed by the assessee in respect of its non-exempt income were related to the exempt income - a simpliciter rejection by the A.O of the aforesaid claim of the assessee which is only backed by his general observations, surmises and conjectures can by no means justify the validity of the jurisdiction assumed by him for computing the disallowance u/s 14A r.w. Rule 8D(2)(iii) in the hands of the assessee. We, thus, not finding favor with the view taken by the CIT(A) who had upheld the validity of the jurisdiction assumed by the A.O for computing the disallowance u/s 14A r.w Rule 8D(2)(iii) set-aside the same - Decided in favour of assessee.
|