TMI Blog2017 (2) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... its tax free investments out of own funds and out of borrowed funds. So far as the claim with regard to the disallowance made in respect of the other expenditure (other than interest which has been restored to the Assessing Officer to find out the source of funds in the investment made), the impugned order has held it to be reasonable and calling for no further disallowance. This finding of the Tribunal is a finding of fact and the same has not been shown to us to be perverse in any manner. In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained. Appeal is admitted on question nos. (i), (ii), (iv) and (v). (i) Whether on the facts and in the circumstances of the case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal (the Tribunal). The impugned order dated 20th February, 2014 is a common order in respect of the Assessment Years 2007-08 and 2008-09. This appeal is in respect of Assessment Year 2008-09. 2. The Revenue urges the following reframed questions of law for our consideration : (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the sales tax exemption benefit for the A.Y. 2008-09 is a capital receipt not liable to income tax? (ii) Whether the respondent assessee is eligible for deduction under Section 80IA of the Income Tax Act by urging that the Rail system is not a profit center but a cost saving exercise undertaken in terms of subsection (4) of Section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under Section 14A of the Act r/w Rule 8D of the Income Tax Rules (Rules). (b) In its Return of Income for A.Y. 2008-09, the respondent assessee had on its own disallowed an expenditure of ₹ 50,15,284/under Section 14A of the Act i.e. expenditure incurred to earn exempt income. However, the Assessing Officer after holding that he is not satisfied with the correctness of the disallowance of expenditure made by the respondent assessee applied Rule 8D of the Rules and determined a further the disallowance of ₹ 4.03 crores. Therefore, the disallowance in the aggregate was ₹ 4.53 crores under Section 14A of the Act in the assessment order dated 28th February, 2011. (c) Being aggrieved, the respondent assessee carried th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order of the Tribunal restored the issue so far as disallowance of interest is concerned to the Assessing Officer to determine the extent to which the investments in tax free units were made out of borrowed funds or out of its own funds, to the Assessing Officer in the subject assessment year. So far as disallowance of other expenses by the respondent assessee is concerned, the Tribunal records its satisfaction with it and holds no further disallowance is called for. 4. Mr. Suresh Kumar, learned Counsel appearing for the Revenue submits that the impugned order of the Tribunal in correctly proceeds on the basis that the Assessing Officer has not recorded his nonsatisfaction with the claim of disallowance made by the respondent assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power by the Assessing Officer, conditioned as it is by the requirement of an objective satisfaction, must, therefore, be scrupulously observed. An objective satisfaction contemplates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and recording of reasons by the Assessing Officer in the event that he comes to the conclusion that he is not satisfied with the claim of the assessee; 6. Thus, no fault can be found with the impugned order of the Tribunal holding that the Assessing Officer should show fallacies in the computation of disallowance done by the respondent assessee. Thus, there is no reason to discard the disallowance done by the respondent assessee. Neve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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