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M/s HPP Energy (India) Pvt. Ltd. Versus ACIT, Circle 12(1), New Delhi

2015 (4) TMI 477 - ITAT DELHI

Disallowance of expenses made u/s 14A - held that:- Provisions of Rule 8D are applicable for this assessment year for making any disallowance under Section 14A of the Act. However, the provisions of Section 14A are triggered when 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 expenditure claimed to have been incurred in relation to income, which does not form part of the total income under the .....

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under this Act".

No satisfaction was recorded to satisfy the mandate of sub-sections (2) and (3) of Section 14A. The position continued to remain same before the learned CIT(A) as well, who also simply upheld the view taken by the Assessing Officer without making good the deficiency left by the Assessing Officer. The position which, therefore, emerges is that neither the Assessing Officer nor the learned CIT(A) recorded the requisite satisfaction as required under Section 14A. In the .....

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ed:- 20-3-2015 - R. S. Syal, AM And C. M. Garg, JM,JJ. For the Appellant : Shri R S Adalakha, Adv. For the Respondent : Shri T Vasanthan, Sr. DR ORDER Per: R S Syal: This appeal by the assessee arises out of the order passed by the CIT(A) on 23.04.2013 in relation to the assessment year 2009-10. 2. The only issue raised before us in the extant appeal is against the confirmation of disallowance of expenses made u/s 14A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). .....

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he Assessing Officer, after reproducing the assessee's explanation dealt with the issue as under "The assesee's reply has been considered and found to be unacceptable. The assessee cannot deny involvement of human acumen for which an appropriate disallowance has to be made as per Rule 8D of the I.T. Act, 1961. In this case the average of opening and closing balances as on 01.04.2008 and as on 31.03.2009 respectively are ₹ 72226700/- & ₹ 77328164/-. The average comes .....

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t year under consideration is 2009-10. The provisions of Rule 8D are applicable for this assessment year for making any disallowance under Section 14A of the Act. However, the provisions of Section 14A are triggered when 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 expenditure claimed to have been incurred in relation to income, which does not form part of the total income under the Act. Sec .....

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er this Act". The provisions of sub-section (3) of Section 14A provide that the provisions of sub-section (2) shall also apply in relation to a case where the assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act. A conjoint reading of sub-sections (2) and (3) of Section 14A makes it manifest that the Assessing Officer is fully empowered to compute disallowance under Section 14A as per Rule 8D where he .....

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ection 14A of the Act. This proposition is subject to one caveat discussed in the ensuing para. 5. The Hon'ble Supreme Court in CIT Vs. Kanpur Coal Syndicate, (1964) 53 ITR 225 (SC) while dealing with the scope of powers of the first appellate authority vis-à-vis the Assessing Officer has held that the powers of the CIT(A) are co-terminus with that of the Assessing Officer inasmuch as he can do what the Assessing Officer can do and also direct him to do what he has failed to do. Simil .....

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