TMI Blog2017 (8) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... dequacy in the action of the Assessing Officer, it has to be held that the satisfaction contemplated u/s 14A(2) of the Act has not been recorded by the Assessing Officer and thus, he has failed to comply with the condition precedent before embarking on applying the formula contained in Rule 8D of the Rules in order to compute the disallowance u/s 14A of the Act. Thus, in our considered opinion, on this aspect itself, the determination of disallowance made by the Assessing Officer is untenable. We find that in its written submissions made to the Assessing Officer during the assessment proceedings, copies of which are placed in the Paper Book, assessee had explained the manner and justification for estimating such expenditure at ₹ 57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is with regard to the disallowance computed by the income-tax authorities u/s 14A of the Act. In brief, the relevant facts are that in response to a notice issued u/s 153A of the Act assessee filed its return of income for the Assessment Year 2008-09 declaring a total income of ₹ 20,47,66,430/-, which was subject to a scrutiny assessment u/s 143(3) r.w.s. 153A of the Act, whereby the total income has been assessed at ₹ 20,57,61,510/- after making an addition of ₹ 9,95,080/- on account of Sec. 14A of the Act. The aforesaid disallowance has since been affirmed by the CIT(A) also and is accordingly in dispute before us. 4. At the time of hearing, while explaining the factual matrix, the learned representative for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempt income, which has not been done, and rather the disallowance has been mechanically computed at ₹ 9,95,080/- by applying Rule 8D of the Rules. At the time of hearing, the learned representative has also referred to the written communications addressed to the Assessing Officer dated 15.12.2011 and 21.12.2011 placed at pages 49 to 52 and 53 to 58 of the Paper Book respectively, wherein assessee had duly explained the manner and justification for estimating the disallowance at ₹ 57,790/-. It has been asserted that, on the contrary, the Assessing Officer has not given any reasons to disregard the claim of the assessee and invoke Rule 8D of the Rules, which could not have been automatically invoked except in the circumstances pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entially, the dispute between the assessee and the Revenue pertains to the quantification of disallowance envisaged u/s 14A of the Act and insofar as the applicability of Sec. 14A of the Act is concerned, there is no dispute. 8. In the above background, now we may proceed to adjudicate the controversy in the present case. Sec. 14A(1) of the Act prescribes that for the purposes of computing the total income under Chapter IV of the Act, no deduction shall be allowed in respect of an expenditure incurred by the assessee in relation to an income which does not form part of the total income under the Act. Sub-section (2) of Sec. 14A of the Act, inter-alia , lays down the manner in which the amount of expenditure incurred in relation to an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd., 347 ITR 272 (Delhi) . We are saying so in the present case for the reason that the initial plea raised by the assessee before the Assessing Officer was that it has incurred no expenditure in relation to the exempt income. At the time of hearing, the learned representative has also referred to the recent judgment of the Hon'ble Supreme Court in the case of Godrej Boyce Mfg. Co. Ltd. (supra) wherein the requirement of recording of satisfaction by the Assessing Officer, as contemplated in Sub-section (2) of Sec. 14A of the Act, before he can proceed to determine the disallowance by application of the formula contained in Rule 8D of the Rules has been upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, it has to be held that the satisfaction contemplated u/s 14A(2) of the Act has not been recorded by the Assessing Officer and thus, he has failed to comply with the condition precedent before embarking on applying the formula contained in Rule 8D of the Rules in order to compute the disallowance u/s 14A of the Act. Thus, in our considered opinion, on this aspect itself, the determination of disallowance made by the Assessing Officer at ₹ 9,95,080/- is untenable. 11. Even otherwise, we find that in its written submissions made to the Assessing Officer during the assessment proceedings, copies of which are placed in the Paper Book, assessee had explained the manner and justification for estimating such expenditure at ₹ 57, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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