TMI Blog2012 (9) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 14A to the extent of ₹ 5.5 lacs against disallowance of ₹ 32,69,000/- made by the AO. 2. Whether ld.CIT(A) was correct on facts and circumstances of the case and in law in deleting the addition of ₹ 43,00,000/- made by the AO on account of commission paid to Director. 3. At the time of hearing, it was pointed out by the learned counsel for the assessee that the issue raised in ground No.1 of the Revenue s appeal is regarding disallowance made under Section 14A read with Rule 8D of Income-tax Rules, 1962. The Assessing Officer has made disallowance u/s 14A with reference to Rule 8D of ₹ 32,69,000/- and the learned CIT (A) has upheld the disallowance made by the Assessing Officer to the extent of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the total income in accordance with such method as may be prescribed . Of course, this determination can only be undertaken if the AO is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. This part of s. 14A(2) which explicitly requires the fulfillment of a condition precedent is also implicit in s. 14A(1) (as it now stands) as also in its initial Avatar as s. 14A. It is only the prescription with regard to the method of determining such expenditure which is new and which will operate prospectively. In other words, s. 14A, even prior to the introduction of sub-ss. (2) and (3) would require the AO to first reject the claim of the assessee with regard to the extent of such expenditure and suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred in relation to income which does not form part of the total income under the said Act. Even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, the AO will have to verify the correctness of such claim. In case, the AO is satisfied with the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, the AO is to accept the claim of the assessee insofar as the quantum of disallowance under s. 14A is concerned. In such eventuality, the AO cannot embark upon a determination of the amount of expenditure for the purposes of s. 14A(1). In case, the AO is not, on the basis of objective criteria and after giving the assessee a reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of both the sides and perused the material placed before us. It is observed that the issue relating to payment of commission to the director is covered in favour of the assessee by the order of the ITAT dated 27th April, 2012 rendered in assessee s own case cited supra by the learned counsel. In the said case, Delhi C Bench of ITAT, after considering various case law cited by both the sides and the provisions of the Act, has held that the commission paid to the director was allowable. Respectfully following the said decision of ITAT, we uphold the order of learned CIT(A) on this issue and dismiss ground No.2 of the Revenue s appeal. 11. In the cross-objection, the assessee has challenged the disallowance sustained by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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