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2020 (3) TMI 1024 - HC - Income TaxDisallowance u/s 14A r.w. Rule 8D - Non recording of satisfaction - HELD THAT:- To determine the amount of expenditure incurred by the assessee in relation to the income which does not form part of the total income under the Act 1961, the Assessing Officer can apply the method to calculate such expenditure as provided under Rule 8D of the Rules 1962 only if the Assessing Officer having regard to accounts of the assessee is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure in relation to the exempted income under the Act 1961. Thus, precondition for applying Rule 8D of the Rules 1962, the Assessing Officer is required to be satisfied as provided in subsection 2 of Section 14A of the Act 1961. We may refer recent pronouncement of this Court in the case of Principal Commissioner of Income Tax Vs. Gujarat State Fertilizer and Chemical Ltd [2018 (10) TMI 1041 - GUJARAT HIGH COURT] finding of fact that as the Assessing Officer did not record any satisfaction under Section 14A(2) OF the Act 1961 prior to invoking Rule 8D, he could not have made any disallowance by applying Rule 8D of the Rules 1962. - Decided against revenue. Disallowance u/s 14A to the book profit under Section 115JB - HELD THAT:- As Question No.2(A) is answered in favour of the assessee to the effect that the Tribunal has not erred in deleting the disallowance under Section 14A of the Act 1961 read with 8D of the Rules 1962, question of making addition of disallowance made under Section 14A by the Assessing Officer to the book profit under Section 115JB of the Act 1961 would not arise. Therefore, the Question No.2(B) is also rejected.
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