TMI Blog2014 (1) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... worked out in accordance with the provisions of section 14A(2) read with Rule 8D – Decided in favour of Assessee. - ITA No. 4814/Mum/2011 - - - Dated:- 12-6-2013 - Shri P. M. Jagtap And Shri Vivek Varma,JJ. For the Appellant : Miss Heena Doshi For the Respondent : Shri Manoj Kumar ORDER Per Vivek Varma, JM:- The appeal is filed by the assessee against the order of CIT(A)- 26, Mumbai, dated 08.03.2011, wherein the following grounds have been taken: 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ["CIT(A)"] erred in confirming the disallowance of certain amount of interest and administrative expenditure allegedly attributed to income earned on investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance, as computed by the AO. 5. Aggrieved, the assessee is now before the ITAT. 6. Before us, the AR submitted that revenue authorities have mechanically invoked the impugned provisions, wherein, the AO, neither went into the accounts of the assessee, nor, did he record his satisfaction, as to why he is invoking the relevant Rule. This, is against the relevant provisions, as held in the case of J K Investors (Bombay) Ltd. vs ACIT, ITA No. 7856/Mum/2011, wherein in para 18 of the order, it has been held, "After considering the principles laid down by various judgments, it is imperative that the Assessing Officer can invoke Rule 8D only when he records satisfaction in regard to the correctness of the claim of the assessee, having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not examined any expenditure claimed in P L account so as to relate to exempt income, nor gave a finding that assessee claim is not correct for any reason. Rule 8D cannot be invoked directly without satisfying about the claims or otherwise. Consequently, the disallowance was not permissible. We therefore, allow the ground of appeal". 7. The AR, therefore, pleaded that since the issue has not been dealt with correctly by the AO, it must be restored to him with the appropriate directions. 8. The DR relied upon the orders of the revenue authorities. 9. We have heard the arguments of both the sides. On going through the relevant provision of section 14A(2) and the case cited by the AR, we are of the view that the AO cannot invoke the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Act in accordance with such method as may be prescribed. Sub-section (2) was inserted so as to provide a uniform method applicable where the Assessing Officer is not satisfied with the correctness of the claim of the assessee. Parliament has provided an adequate safeguard to the invocation of the power to determine the expenditure incurred in relation to the earning of non-taxable income by adoption of the prescribed method. The invocation of the power is made conditional on the objective satisfaction of the Assessing Officer in regard to the correctness of the claim of the assessee, having regard to the accounts of the assessee. These safeguards which are implicit in the requirements of fairness and fair procedure under article 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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