TMI Blog2016 (7) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... correctness of the accounts of the assessee for making disallowance u/s 14A of the Act, no further disallowance can be made by the AO. - Decided in favour of assessee Non granting the TDS credit - Held that:- AO has disallowed the claim of the credit for TDS amounting to ₹ 11,95,766/- and credit for TDS as not claimed by the assessee amounting to ₹ 26,10,633/- for the reasons that the TDS certificate were received after filing the return of income. The assessee has filed a copy of rectification letter dated 24.12.2009 addressed to the AO stating that the original TDS certificate mentioning amount of ₹ 26,10,633/- were filed with the AO and also details of TDS claimed for an amount of ₹ 11,95,766/- were filed during the course of hearing before the AO vide letter dated 13.11.2009. In view of the above facts we are of the view that the AO should have allowed credit to the assessee when the assessee has filed rectification petition before him and even the CIT(A) has directed the AO to allow claim of TDS after verifying the same. We direct the AO to allow the claim of TDS amounting to ₹ 11,95,766/- which were filed before him during the course of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ( 26 SOT 603 ) (Mum)(SB), disallowed the claim of the assessee. The assessee before the CIT(A) challenged the disallowance made by AO disallowing direct expenses under Rule 8D (2)(ii) amounting to ₹ 11,56,498/- and 0.5% of average investment under rule 8D (2)(iii) at ₹ 6,82,00,000/-. The CIT(A) confirmed the action of the AO by observing as under (Para 5): 5. I find that the A.O., while computing the disallowance under Rule 8D has taken a sum of ₹ 11,56,498/- as the direct expenses under Rule 80 as offered by the assessee. However, under Rule 8D(2)(ii) the A.O. has computed the disallowance in respect of interest not directly attributable to exempted income as NIL . The only disallowance made by the A.O. is 0.5% of the average investment which works out to ₹ 6,82,00,000/ -. As explained above I am of the considered view that the computation made by the A.O. has to be sustained as the A.O. has applied the most reasonable method in computing the disallowance u/s. 14A. In the result these grounds of appeal are dismissed. Aggrieved, the assessee is in second appeal before us. 4. At outset, the ld. counsel of the assessee submitted before us tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh, recording of satisfaction as provided in sub section (2) was brought to statute by Finance Act, 2006, w.e.f. 1st April 2007, and applicable for assessment year 2007 08, but, as held by Hon'ble Delhi High Court, in Maxopp Investment Ltd. (supra), even prior to introduction of sub section (2) to section 14A, the Assessing Officer is required to record his satisfaction regarding correctness of assessee s claim. In the present case, on a perusal of the assessment order, it is very much clear that the Assessing Officer has not recorded any such satisfaction regarding the correctness of assessee s claim with regard to its books of account. On reading of the assessment order, it is patent and obvious that the Assessing Officer has rejected assessee s computation of disallowance under section 14A, simply for the reason that it is not in terms with the method prescribed under rule 8D. In view of the aforesaid, we have no hesitation in holding that satisfaction recorded by Assessing Officer with regard to correctness of assessee s claim is without valid reasons. Now, coming to the merits of the disallowance worked out by the assessee as well as the Assessing Officer, it is observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to assessment year 2008 09, but a reasonable disallowance can be made under section 14A. After considering the facts of the present case, we are of the opinion that the disallowance made by the assessee under section 14A amounting to ₹ 15,95,064, is reasonable. We, therefore, direct the Assessing Officer to restrict the disallowance to that amount. In view of our decision as above, the issue raised by the assessee in ground no.2(iii) becomes redundant. Grounds are partly allowed. 5. The ld. Counsel for the assessee, in view of the above facts, stated that in the present year also there is no satisfaction recorded by the AO for the reasons that the assessee himself has made out disallowance of the amount as noted by the AO in his assessment order at page 1 amounting to ₹ 28,28,635/-. The ld. counsel for the assessee took us through para 5.2 of the assessment order and stated that the AO has simply applied the decision of the Special Bench of the Tribunal in the case of Daga Capital Management Pvt. Ltd(supra) and has not recorded any satisfaction in this year also. 6. When this facts were confronted to the ld.Sr.DR, whether the AO has recorded satisfaction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the course of hearing before the AO vide letter dated 13.11.2009. In view of the above facts we are of the view that the AO should have allowed credit to the assessee when the assessee has filed rectification petition before him and even the CIT(A) has directed the AO to allow claim of TDS after verifying the same. We direct the AO to allow the claim of TDS amounting to ₹ 11,95,766/- which were filed before him during the course of assessment proceedings and also the TDS certificate received late but filed before him along with the rectification letter dated 24.12.2009 amounting to ₹ 26,10,633/-. We direct the AO to give credit of this TDS amount and decide the claim immediately. Now coming to appeals Nos.ITA 4408/M/2012 and ITA NO.1836/M/2013. 9. The next common issue in these appeals of the assessee is against the order of the CIT(A) confirming the disallowance made by the AO in respect of expenditure claimed qua exempt income by invoking the provisions of section 14A of the Act r.w.r.8D of the Rules amounting to ₹ 7,02,06,780/- and ₹ 4,94,96,516/- for A.Ys 2008-09 and 2009-10 respectively. 10. We have heard the rival submissions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the amount of ₹ 99,751/- as reflected in ITS-TDS information-C belonging to assessee. We find that the CIT(A) has only directed the AO to verify the same. We further add that AO will allow opportunity before making addition on this count. Accordingly, this issue of assessee s appeal is allowed for statistical purposes. 14. The next issue in the appeal bearing ITA No.1836/M/2013 is with regard to charging interest under section 234C of the Act. 15. The ld. Counsel for the assessee submitted that the interest charged by the revenue on the amount of TDS credit not allowed and also not allowed credit of advance tax amounting to ₹ 5,44,05,867/- and ₹ 1,70,00,000/- respectively. Ld. Counsel argued that the AO should not have been charged interest for the reasons, that the assessee has filed complete details in respect of TDS and advance tax before the AO, which is pending rectification as noted in the above grounds. The ld. Counsel for the assessee stated that the assessee is charging with interest u/s 234C amounting to ₹ 34,05,105/- but actual interest u/s 234C leviable is only ₹ 13,47,442/- and excess interest charges on ₹ 20,57,663/- should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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