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TMI Blog2017 (9) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs.6,41,37,885/- made u/s 14A of the I.T. Act read with Rule 8D of the I.T. Rules." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessing Officer noticed that the assessee has received exempt dividend income to the tune of Rs. 1,88,25,804/- during the year under assessment. AO, by invoking the provisions contained under section 14A of the Income-tax Act, 1961 (for short 'the Act') read with Rule 8D of Income-tax Rules, 1962 (for short 'the Rules'), proceeded to work out the disallowance as under :- Clause Particulars Calculation Amount i) Expenditure directly related to exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue challenging the impugned order contended inter alia that the AO has worked out the disallowance under Rule 8D as per accounts rendered by the assessee having been duly explained at the second last page of the assessment order; that section 114 of the Evidence Act, 1872 raises presumption in favour of the Revenue that there was nonsatisfaction of the AO and relied upon the decisions rendered by Hon'ble Apex Court in Mak Data Pvt. Ltd. vs. CIT - 2013-TIOL- 58-SC-IT and CIT vs. Daulat Ram Rawatmull - (1973) 87 ITR 349 (SC). 6. However, on the other hand, the ld. AR for the assessee to repel the arguments addressed by ld. DR contended inter alia that the AO proceeded to invoke the provisions contained u/s 14A read with Rule 8D without r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable." 9. Similarly, Hon'ble High Court of Delhi in CIT vs. Taikisha Engineering India Ltd. (supra) held on the identical issue as under:- "Section 14A of the Income-tax Act, 1961, read with rule 80 of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure to earn the income which does not form part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee. 11. Moreover, the assessee has come up with specific argument that it has not incurred any interest cost for earning exempt income but this plea of the assessee has also been brushed aside by the AO without recording any reason of dis-satisfaction. Moreover, when the assessee is having ample cost free funds to the tune of Rs. 6049.43 crores and had not made investment to earn exempt income as on 31.03.2011, but in its subsidiaries for commercial expediency, the question of disallowance under Rule 8D does not arise. 12. So, the AO has made disallowance without recording ..... X X X X Extracts X X X X X X X X Extracts X X X X
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