TMI Blog2016 (11) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... nted with a figure which, prima facie, is not in accord with what should approximately be the figure on a fair working out of the provisions, he is but bound to reject it. In such circumstances the AO ordinarily would express his opinion by rejecting the disallowance offered and then proceed to work out the methodology enacted. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) [CIT(A)] by independent reasoning and analysis of Section 14A and Rule 8D was of the opinion that the preliminary stage of recording satisfaction with respect to the amount offered by the assessee as disallowance i.e. expenses attributable to the earning of exempt income, had not been carried out in which the AO would have been clothed with jurisdiction to enter into the next stage and calculate the disallowance in terms of Rule 8D. 4. The Income Tax Appellate Tribunal (in short the Tribunal ) reversed the CIT(A) s opinion and held that in the circumstances of the case the opinion expressed by the AO was sufficient and justified the disallowance ultimately made. 5. It is urged by the assessee that the ITAT has fallen into error in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove that conditions for disallowance are satisfied...... .......The investment made, being a conscious decision and having deployment of funds clearly brings into picture expenditure by way of cost of funds, Invested. Composite fund having cost needs to be spread so as to apportion appropriate cost of funds invested in the activity lending to carrying of exempt income. In view of above, the provisions of sub sections (2) of section 14 A and Rule 8D of IT Rules are in operation and therefore will strictly he adhered to by the assessee. The language of subsection (1) of section 14A clearly provides that no deduction shall he allowed in respect of expenditure incurred by the assessee in relation to income which does not form par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount paid to two employees as salary who have been exclusively involved in looking after the investment affairs of the company. Total disallowance is worked out as per Rule 8D of I.T. Rules here as under... 6. This Court in the Consolidated Photo Finvest Ltd. (supra) following the judgment of the Bombay High Court in Godrej Boyce Mfg. Co. Ltd. vs Dy. CIT (2010) 194 Taxman 203, held that the AO has to take an overall view and not a piecemeal decision regarding merits of the disallowance. A close analysis of that judgment would show the AO s view was reversed by the CIT(A) in that case which was ultimately affirmed by the ITAT. This factor significantly dissuaded the Court from exercising its jurisdiction under Section 260A o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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