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2020 (5) TMI 627 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - CIT(A) upheld rejection of suo motu disallowance offered by the assessee but gave some partial relief on the computation part - as pointed out by the assessee that ‘at best’ entire expenses of project and investment department could be treated as ‘expenditure incurred by the assessee in relation to income which does not form part of the total income’ - HELD THAT:- AO cannot reject the suo motu disallowance offered by the assessee on the ground that such a disallowance under rule 8D will be more; that’s putting cart before the horse. Quite to the contrary, an AO can resort to rule 8D only when, as per the prescription of Section 14A(2) “the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act”. That satisfaction, as required, u/s14A(2), for invoking rule 8D, cannot be on the basis of mechanism of rule 8D itself; it has to be independent of rule 8D. AO has noted the explanation of the assessee and proceeded to disregarded the same on the basis of working of rule 8D(2)(i) and 8D(2)(iii). There is no other, and in fact no, reason for rejection of the computation of disallowance by the assessee. On the fact of this case, there is not even a whisper of the reason, barring reference to rule 8D(2)(i), for rejecting the suo motu disallowance offered by the assessee. On these facts, and for the detailed reasons set out above, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance offered by the assessee. Once we hold so, all other issues raised in these appeals become wholly academic and infructuous, and there is no need to adjudicate on the same. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted.
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