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2022 (1) TMI 1095 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - Assessee is suo moto made the disallowance - HELD THAT:- We noted from the assessment order that the AO has recorded the finding that the assessee has not incurred any expenditure in relation to income which does not form part of total income and this finding is totally absurd whereas the assessee has incurred expenditure. As regards interest expenses, once the AO is unable to prove the nexus of expenditure with the investment made in instruments giving raise to exempt income, the presumption will come into play and presumption is that the assessee might have invested out of interest free funds available with it in the instruments giving raise to exempt income. Hence, this issue is squarely covered in favour of the assessee by the decision of Hon'ble Bombay High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] - Respectfully following the order of Hon'ble Bombay High Court, we allow this issue of assessee's appeal. Administrative expenses disallowed under Rule 8D(2)(iii) - We noted from the assessment order that the AO has not recorded any subjective satisfaction and the so called satisfaction recorded by the AO is on totally wrong presumption that the assessee has not attributed any expenditure to exempt income, whereas the assessee has disallowed a sum of ₹ 11,85,570/- towards exempt income. Once the AO has not recorded satisfaction as envisaged under Rule 8D(2) of the Rules, the issue is in favour of the assessee in view of the decision of Hon'ble Supreme Court in the case of Maxopp Investments Ltd.. [2018 (3) TMI 805 - SUPREME COURT]. Issue decided in favour of the assessee as the AO failed to record satisfaction for making disallowance under Rule 8D(2) of the Rules. Hence, we delete the disallowance and allow this issue of assessee's appeal.
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