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2022 (9) TMI 598 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - condition precedent to embarking upon the determination of the amount of expenditure incurred in relation to exempt income - Scope of amended Rule 8D - HELD THAT:- We find that Ld. NFAC/Ld. CIT(A) while confirming the disallowance under section 14A ignored the amended Rule 8D whereas interest disallowance as existed prior to 01.06.2016 under Rule 8D(2)(ii) done away from by amending Rule 8D w.e.f.1st June, 2016. AO has made disallowance under Rule 8D(2)(ii) only and not under Rule 8D(2)(iii) (as does not exist on the statute book). Disallowance made by AO are strictly in accordance with the existing provision of Rule 8D2(ii). The figure of investment for earning exempt income as on 31.03.2016 and 31.03.2017 respectively, is not disputed by ld. AR for the assessee. Therefore, we do not find any reason to interfere with the disallowance worked out by Assessing Officer. Whether no satisfaction was recorded by AO before invoking the formula of Rule 8D for making disallowance under section 14A? - We are not convinced with the submission made by assessee as the Assessing Officer has duly recorded his satisfaction about the correctness of claim of assessee and held that exempt income cannot be earned without making any expenses. We find that the submission made by assessee that assessee is making more emphasis on the duty of the Assessing Officer rather to show or offer a suo motu reasonable indirect expense incurred for earning exempt income. We find that the assessee has not even offered a token amount for suo motu disallowance except contending that no expenditure was incurred for earning exempt income. The exempt income consists of dividend income, interest from tax free bonds and long-term capital gains - We find that the assessee has only tried to explain that no expense was incurred qua interest from tax free bonds and dividend income. However, nowhere explained as to how the long-term capital gains was earned. Therefore, we do not find any reason to deviate from the disallowance worked out by Assessing Officer. Decided against assessee.
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