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2017 (8) TMI 37 - GUJARAT HIGH COURTAddition u/s 14A - whetehr he Assessing Officer committed serious error in applying the formula contained in sub rule (2) of Rule 8D of the Rules without recording his satisfaction rejecting the assessee’s accounts reflecting that no expenditure was incurred for earning such tax exempt income? - Held that:- Section 14A as well as Rule 8D require the Assessing Officer to arrive at a satisfaction that the claim of the expenditure made by the assessee is not correct. It is only then he can apply the formula under sub-rule (2) of Rule 8D. However, these statutory provisions do not require that such satisfaction must be arrived at in a particular manner. As long as there is sufficient material to enable the Assessing Officer to arrive at such a satisfaction and which is also recorded by him in the order of assessment, the requirements of the statute would be satisfied. In the present case, we have noted that the Assessing Officer has given detailed reasons for discarding the assessee’s theory that to earn the assessable income the assessee incurred no expenditure whatsoever. The Tribunal confirmed such view. Decision of the Assessing Officer to apply the formula under Rule 8D was therefore correct. - Decided against assessee.
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