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2022 (2) TMI 286 - HC - Income TaxDisallowance u/s 14A read with Rule 8D - no satisfaction had been recorded by AO to the effect that the disallowance proposed by the appellant was incorrect - HELD THAT:- It is well settled in law that assessing officer has to record reasons for disagreeing with the claim of the assessee that it had incurred no expenditure for earning such exempt income. Even Rule 8D(1) requires the assessing officer to mandatorily record his satisfaction that the claim made by the assessee that no expenditure has been incurred in earning the exempt income is incorrect. [See:'GODREJ & BOYCE MANUFACTURING COMPANY LTD.[2017 (5) TMI 403 - SUPREME COURT] From the perusal of the order passed by the assessing officer it is evident that the assessing officer has failed to record its satisfaction with regard to the claim of the assessee that it had incurred any expenses in earning the exempt income except a sum of ₹ 1,61,035/-. Therefore, in the absence of any satisfaction recorded by the assessing officer, the substantial question of law has to be answered in the negative. As fairly stated by learned Senior counsel that disallowance to the extent of ₹ 1,61,035/- which was proposed by the assessee itself has to be upheld. Therefore, the disallowance under Section 14A of the Act read with Rule 8D of the Rules is confined to the extent of ₹ 1,61,035/-. To the aforesaid extent, the orders passed by the Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeals and the Assessing Officer are modified. The Assessing Officer is directed to disallow a sum of ₹ 1,61,035/- under Section 14A of the Act read with Rule 8D of the Rules. .
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