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TMI Blog2016 (11) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... ude to the exercise conducted by him under the said provisions, further disallowance was not possible. 2. The facts are that the assessee had reported Tax Exempt Income to the tune of Rs. 105.24 crores, during Assessment Year ('AY') 2009-10. The assessee had offered disallowance of Rs. 25,19,380/- as expenses attributable to that exempt income. The Assessing Officer ('AO') after carrying out an elaborate analysis of the provisions as well as Rule 8D and also after discussing the relevant case law concluded that Rs. 3,87,10,146/- had to be disallowed and he proceeded to do so. 3. The Commissioner of Income Tax (Appeals) [CIT(A)] by independent reasoning and analysis of Section 14A and Rule 8D was of the opinion that the preliminary stage o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer before invoking the provision of section l4A of I T Act. These common ratios are as under:- 1. The assessing officer has to draw dissatisfaction in regard to the correctness of the claim of the assessee in respect of the expenditure which the assessee claims to have incurred in relation to income which does not form part of the total income. 2. The satisfaction of the assessing officer must he arrived at on an objective basis. 3. If the assessing officer wants to disallow an expenditure under a particular provision then the onus would be on the assessing officer to prove that conditions for disallowance are satisfied...... .......The investment made, being a conscious decision and having deployment of funds cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had substantial interest free surplus fund as compared to quantum of investment resulted in earning dividend income, hence, the assessee's contention in regard to non deployment of interest bearing borrowed fund in investment, is acceptable, however, keeping in view the substantial growth in investment during the year as compared to previous year, and quantum of tax free dividend income received. The third clause of Rule 8D is dearly attracted. The assessee has also invoked the p1*ovision of section 14A of I T Act while disallowing an amount of Rs. 2519380/- which is the amount paid to two employees as salary who have been exclusively involved in looking after the investment affairs of the company. Total disallowance is worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this instance the elaborate analysis carried out by the AO - as indeed the three important steps indicated by him in the order, shows that all these elements were present in his mind, that he did not expressly record his dissatisfaction in these circumstances, would not per se justify this Court in concluding that he was not satisfied or did not record cogent reasons for his dissatisfaction to reject the AO's conclusion. To insist that the AO should pay such lip service regardless of the substantial compliance with the provisions would, in fact, destroy the mandate of Section 14A. 9. Having regard to these facts, this Court is satisfied that the disallowance which is otherwise in accord with Rule 8D(c) was justified. No substantial que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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