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2023 (11) TMI 640 - AT - Income TaxDisallowance u/s 14A - AO was of the view that some more expenditure has to be necessarily incurred for carrying out the activity of investment and to earn exempt income - AO therefore recorded his dissatisfaction with the correctness of the assessee’s claim - HELD THAT:- It is not in dispute that during the year the assessee did not earn any exempt income. It is also not in dispute that the assessee on its own disallowed an amount suo-moto. AO says only that for carrying out the activity of investment and to earn exempt income, some more expenditure than what the assessee itself disallowed has to be necessarily incurred. This is only a surmise and guess not based on any cogent reason whereas the assessee explained that the suo-moto disallowance made by it is equivalent to salary of an official looking after the activity of investment etc. A bald satisfaction of the Ld. AO is not envisaged under section 14A(2) of the Act. He has to record his satisfaction over the assessee’s claim ‘having regard to the accounts of the assessee’ which has not been done. In such a case disallowance made by the Ld. AO is not sustainable as held by the Hon’ble Delhi High Court in Pr. CIT vs. Keshav Power Ltd. [2018 (11) TMI 645 - DELHI HIGH COURT] and Reliance Capital asset Management Ltd. [2017 (10) TMI 177 - BOMBAY HIGH COURT] - We, therefore hold that disallowance made by the Ld. AO under section 14A r.w. Rule 8D and confirmed by the Ld. CIT(A) is not justified. The appeal of the assessee is decided in its favour.
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