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2022 (4) TMI 157 - AT - Income TaxAddition u/s. 14A r.w. Rule 8D(2)(iii) - Mandation of recording satisfaction - HELD THAT:- There was no occasion to AO to record satisfaction for not accepting the accounts before invocation of Rule 8D of the Rules. In our opinion, when the assessee itself submitted its working before the AO accepting in principle that the disallowance is required to be made under Rule 8D and accordingly the AO made disallowance under Rule 8D(2)(iii). We note that a contention was raised before the CIT(A) regarding having surplus fund making investments from its own funds and it was accepted by the CIT(A) resulted into deletion of disallowance under Rule 8D(2)(ii) - CIT(A) also held that the assessee failed to point out any error in respect of disallowance under Rule 8D(2)(iii) of the Rules, if that is so, a ground raising challenging the action of AO for non-recording of satisfaction concerning the accounts before us, is untenable. Therefore, we reject the arguments of ld. AR in respect of contentions raised in ground Nos. 1 to 4. Thus, ground Nos. 1 to 4 raised by the assessee are dismissed. Disallowance in respect of those investments which yielded exempt income - HELD THAT:- It is a settled principle to restrict the disallowance to the investment earned dividend income and this Tribunal has been following in directing the AO to compute the expenditure for the purpose of section 14A in respect of those investments yielded exempt income. Following the same we direct the AO to compute the disallowance taking into consideration those investments which yielded exempt income. The assessee is liberty to file evidences, if any, in this regard. Thus, the ground No. 5 raised by the assessee is allowed.
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