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2022 (10) TMI 75 - AT - Income TaxAddition u/s 14A - assessee company offered suo motu disallowance under the provisions of section 14A - HELD THAT:- The provisions of sub-section (2) of section 14A provides that resort to disallowance u/s 14A can be made only if the AO is not satisfied with the correctness of the claim of assessee in respect of expenditure incurred to earn the exempt income. Therefore, it is incumbent upon the AO to record satisfaction as to the correctness or otherwise of the assessee company that only an expenditure was incurred to earn the exempt income. Necessity of recording satisfaction - It is a settled position of law that the satisfaction recorded by the AO should be based on the objective material and cannot be subjective. From mere reading it is clear that the AO has not recorded satisfaction regarding the correctness of suo motu disallowance offered by the assessee u/s 14A and mere rejection of the explanation of the assessee per se, cannot be said to be a satisfaction as envisaged u/s 14A(2). The ratio laid down by the Hon’ble Delhi High Court in the case of PCIT vs. Moonstar Securities Trading and Finance Co. (P) Ltd [2018 (8) TMI 1151 - DELHI HIGH COURT] and PCIT vs. Keshav Power Ltd. [2018 (11) TMI 645 - DELHI HIGH COURT] as well as the Hon’ble Bombay High Court in the case of Pr.CIT vs. Reliance Capital Asset Management Ltd [2017 (10) TMI 177 - BOMBAY HIGH COURT] is squarely applicable. Therefore, we hold that the disallowance of Rs.1,20,60,460/- as made by the AO as confirmed by the CIT(A) is incorrect in law, as the AO had failed to record the satisfaction as envisaged u/s 14A(2). Thus, the grounds of appeal no.1 and 4 stand allowed. Deduction u/s 10B - decision of CIT(A) in holding that the assessee company is not entitled to deduction u/s 10B for want of Board’s approval as envisaged under Explanation to sub-section (2) of section 10B - HELD THAT:- This issue was decided by this Tribunal in assessee’s own case for assessment year 2010-11 [2022 (10) TMI 1 - ITAT PUNE] in favour of assessee company. The ld. CIT-DR had not made out case before us to take different view. Respectfully, following the decision of the Tribunal in assessee’s own case (supra), we hold that the assessee company is entitled for deduction u/s 10B of the Act.
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