TMI Blog2014 (1) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer - The disallowance under Rule 8D as worked out as per the formula given in the Rules was more than the actual expenditure, the Assessing Officer has rightly restricted the disallowance to the expenditure actually incurred by the assessee - Decided against assessee. - ITA No. 5231/Del/2012 - - - Dated:- 17-1-2014 - Shri G. D. Agrawal And Shri Aby T. Varkey,JJ. For the Appellant : Shri Rajeev Saxena, Advocate. For the Respondent : Shri S. N. Bhatia, Sr. DR. ORDER Per G. D. Agrawal,VP. This appeal by the assessee is directed against the order of learned CIT(A)-I, New Delhi dated 11th July, 2012 for the AY 2008-09. 2. The only ground raised by the assessee reads as under:- "On the facts and circumstances of the case, the ld.CIT(A) has erred in confirming the disallowance of Rs.4,20,376/- u/s 14A of the Income Tax Act." 3. At the time of hearing before us, the learned counsel argued at length. He stated that as per Section 14A of the Income-tax Act, 1961, disallowance can be made only if there is some expenditure incurred in relation to earning of exempt income. As per Section 14A(2) and (3), the Assessing Officer has to record the finding that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of Rule 8D. However, without pointing out any such mistake, the assessee cannot claim that no disallowance under Section 14A is required to be made. 6. We have carefully considered the submissions of both the sides and perused the material placed before us. The only dispute in this appeal is with regard to disallowance made by the Assessing Officer under Section 14A amounting to Rs. 4,20,376/- which is sustained by the learned CIT(A). The assessee has disputed the disallowance mainly on two grounds - (i) that no satisfaction is recorded by the Assessing Officer as envisaged by sub-section (2) (3) of Section 14A, and (ii) that no expenditure was incurred by the assessee for earning of exempt income. In support of the first contention, the learned counsel for the assessee has relied upon the two decisions of ITAT Delhi Benches in the case of P.P.C. Business Products Pvt. Ltd. (supra) and M/s ACME Computers Ltd. (supra). So far as the legal proposition put forth by the learned counsel is concerned, there cannot be any dispute. As per sub-section (2) of Section 14A, the Assessing Officer can embark upon determination of amount of expenditure incurred in relation to exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate preceding year, the disallowance was also made on the issue for similar fact by application of section 14A read with rule 8D. since there is no change in facts in this year disallowance u/s 14A is made. 2.11 In view of above discussion, facts of the case and the law as interpreted by various Courts, it is held that the circumstances warrant applicable of provisions of Section 14A read with Rule 8D which has retrospective effect. The disallowance as per rule 8D will be as under:." 9. From the above, it is evident that the Assessing Officer after detailed discussion has arrived at the conclusion that disallowance is required to be made under Section 14A read with Rule 8D. Therefore, while on law, we agree with the above decisions of ITAT relied upon by the learned counsel that recording of the satisfaction by the Assessing Officer as envisaged by sub-section (2) (3) of Section 14A is must before making any disallowance, on facts, those decisions would not be applicable because in the assessee's case, in our opinion, the Assessing Officer, after detailed discussion, has recorded his satisfaction with regard to applicability of Section 14A. 10. Coming to the assessee's sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of J.H. Business India Pvt.Ltd. 480,210.00 480,110.00 (P.Y 330010 Equity shares of Rs.10/- each) IV) 19,19,810 Equity shares of Rs.10/- each of P.P.C. Business Products Pvt.Ltd. 19,198,100.00 19,198,100.00 (P.Y 19,19,810 Equity shares of Rs.10/- each) V) 22,17,500 Equity Shares of Rs.10/- each of Surya Vinayak Industries Ltd. 101,325,000.00 101,325,000.00 (P.Y 21,70,000 Equity shares of Rs.10/- each) VI) 4,96,000 Equity Shares of Rs.10/- each Of Allied Perfumers P.Ltd. 5,952,000.00 5,952,000.00 (P.Y 4,96,000 Equity shares of Rs.10/- each) VII) Nil Equity shares of Rs.10/- each Of Global Business India P.Ltd. -- 25,000,00 (P.Y 50,000 Equity shares of Rs.10/- each) VII) 239,200 Equity shares of Rs.100/- each Of SVIL Mines Ltd. 105,600,000.00 105,600,000.00 (P.Y 239,200 Equity shares of Rs.10/- each) Total 234,563,810.00 234,563,710.00 11. Thus, when out of the available funds of Rs. 24.53 crores, more than 95% funds i.e. Rs. 23.45 crores is invested in the shares of various companies, can it be said that the entire expenditure debited to the profit loss account was incurred for earning of interest income whic ..... 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