Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (2) TMI 493 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - Mandation of recording proper satisfaction regarding incorrectness of the claim of the assessee - second round of litigation - HELD THAT:- There is no dispute with regard to the fact that Rule 8D of Income Tax Rules, 1962 (“the Rules”) is not applicable for the Assessment Year under appeal. We find that Ld.CIT(A) erroneously affirmed the action of the Assessing Officer regarding disallowance of administrative expenses applying the Rule 8D of the Rules. This approach of authority below is not justified. So far interest expenditure is concerned, the Ld.CIT(A) has given finding on fact that from the details submitted, it was seen that the opening and closing funds available, with the appellant assessee far exceeded the total average investment of ₹ 807.7 crores. This finding on fact is not assailed by the Revenue. However, the disallowance regarding administrative expenditure is under challenge before this Tribunal. Undisputedly, the Assessing Officer made disallowance by applying Rule 8D of the Rules, this Rule came into vogue with effect from Assessment Year 2008-09. Hence, the Assessing Officer erred in law by applying the Rule 8D of the Rules for disallowance. Therefore, looking to the quantum of investment, business of the assessee and material placed before us, we are of the considered view that it would sub-serve the interest of justice if the disallowance is restricted to a sum of ₹ 2,50,00,000/-. As it cannot be presumed that for handling, overseeing and making investment, no expenditure could be incurred. The assessee has failed to demonstrate how much administrative expenditure was incurred qua the investment that earned tax free income. Therefore, a fair estimation is made for such disallowance. The grounds raised by the assessee are partly allowed.
|