TMI Blog2016 (5) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... s and no disallowance under section 14A towards any interest expenditure can be made. Apropos, the non-recording of satisfaction by the Ld. AO in terms of Rule 8D(1) of the Rules, we hold that the Ld. AO is supposed to record his satisfaction as to how the disallowance made by the assessee in the return of income is incorrect with specific reference to books of account of the assessee. In the instant case, the Ld. AO had not recorded the satisfaction in the required manner as per Rule 8D(1) of the Rules. Hence, we hold that Ld. AO is not entitled to mechanically apply rule 8D(2) of the Rules without recording satisfaction in terms of Rule 8D(1) of the Rules - Decided in favour of assessee - C.O. No. 65/Kol/2014 In I.T.A No.721/Kol/2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire fresh investigation of the facts. Hence, in the light of the decision of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT reported in (1998) 229 ITR 383 (SC) , we admit the additional ground raised by the assessee for the purpose of adjudication. 5. The assessee has raised the following grounds: 1. For that the appeal is barred by limitation and therefore liable to be dismissed as such. 2. For that the Ld. C.I.T(A) was perfectly justified in deleting the addition of ₹ 13,24,582/ - when the AO did not record any satisfaction and mechanically applied the provisions of sec. 14A read with Rule 80. 3. For that the Ld. C.I.T(A) was fully justified in deleting the addition of ₹ 13,24,582/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He also argued that it is not the case of the Ld. AO that the borrowed funds have been diverted for non-business purposes, which is quite evident from the fact that no disallowance of interest u/s. 36(1)(iii) of the Act has been made by the AO in the assessment. Secondly, he argued that no satisfaction was recorded by the AO in terms of Rule 8D(1) of the Rules and accordingly, no disallowance u/s. 14A of the Act could be made by the Ld. AO and in support of which he placed reliance on the Coordinate bench decision of this Tribunal in the case of Hindustan Motors Ltd. Vs. DCIT in ITA No.171/Kol/2012 for AY 2008-09 dated20.11.2015. In response to this, the Ld. DR vehemently supported the order of the Ld. AO. 7. We have heard rival conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that when investments are made out of common pool of funds and non-interest bearing funds were more than the investments in tax-free securities, no disallowance of interest expenditure under section 14A can be made. In the light of the abovesaid decisions, we are of the view that disallowance of interest expenses in the present case of ₹ 49,42,473 made under rule 8D(2)(ii) of the Income-tax Rules should be deleted. We order accordingly. The aforesaid shows that the Tribunal has followed a decision of the Bombay High Court in the case of CIT v. HDFC Bank Ltd., I. T. A. No. 330 of 2012, judgment dated July 23,2014 - [2014] 366 ITR 505 (Bom)). When the issue is already covered by a decision of the High Court of Bombay with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal that where the assessee makes a claim that only a particular amount is to be disallowed under section 14A and if the Assessing Officer proposes to invoke section 14A, he has to record the satisfaction as to how the claim of the assessee is not correct having regard to the accounts of the assessee. It was held that if there is no such satisfaction recorded by the Assessing Officer, no disallowance could be made by him by invoking the provisions of section 14A. Keeping in view this decision of the Coordinate Bench of this Tribunal in the case of REI Agro Limited, which has been affirmed by the Hon'ble Calcutta High Court, we hold that in the absence of requisite satisfaction recorded by the Assessing Officer showing how the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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