TMI Blog2015 (10) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... se may be, in relation to exempt income, the Assessing Officer would have to indicate cogent reasons for the same. In CIT v. Taikisha Engineering India Ltd.(2014 (12) TMI 482 - DELHI HIGH COURT ), in similar circumstances, the Court disapproved of an AO invoking Section 14A read with Rule 8D (2) of the Rules without recording his satisfaction and noted that the recording of satisfaction as to why "the voluntary disallowance made by the assessee was unreasonable and unsatisfactory" is a mandatory requirement of the law. - Decided against revenue. - ITA 283/2014 - - - Dated:- 24-9-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr Kamal Sawhney, Sr. Standing Counsel, Mr Ragvendra Singh, Junior Standing Counsel Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish an explanation as to why the expenses relevant to the earning of dividend should not be disallowed under Section 14A of the Act. The Assessee's representative submitted that as no expenses have been incurred for earning of dividend income, this was not a case for making any disallowance. The AO, inter alia, observed that the invocation of Section 14A is automatic and comes into operation, without any exception, as soon as the dividend income is claimed as an exemption. The AO proceeded to disallow the amount of ₹ 33,35,986/- under Section 14A read with Rule 8D of Income Tax Rules, 1962 and added the said amount to the total income of the Assessee. 6. The CIT(A) allowed the appeal filed by the Assessee by an order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to determine the amount of such expenditure only if 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 the said Act. In other words, the requirement of the Assessing Officer embarking upon a determination of the amount of expenditure incurred in relation to exempt income would be triggered only if the Assessing Officer returns a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. Therefore, the condition precedent for the Assessing Officer entering upon a determination of the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod being the method stipulated in rule 8D of the said Rules. while rejecting the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, in relation to exempt income, the Assessing Officer would have to indicate cogent reasons for the same, (emphasis supplied) 9. In CIT v. Taikisha Engineering India Ltd. 370 ITR 338 (Del.), in similar circumstances, the Court disapproved of an AO invoking Section 14A read with Rule 8D (2) of the Rules without recording his satisfaction and noted that the recording of satisfaction as to why the voluntary disallowance made by the assessee was unreasonable and unsatisfactory is a mandatory requirement of the law. 10. No substantial question of law arises. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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