TMI Blog2018 (3) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... and ground no. 1 raised by the Revenue is dismissed. Disallowance of provision for leave encashment by applying the provision of 43B(f) - Held that:- We find that though the Hon’ble Calcutta High Court in the case of Exide Industries Ltd vs Union of India [2007 (6) TMI 175 - CALCUTTA High Court] struck down the provisions of section 43B(f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon’ble Supreme Court [2008 (9) TMI 921 - SUPREME COURT] which had not stayed the judgment of the Calcutta High Court during Leave proceedings. But the Hon’ble Supreme Court had only passed an interim order on the impugned issue. Hence we deem it fit and appropriate , in the interest of justice and fair play, to set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed its original return of income for the assessment year 2008-09 on 30.09.2008 declaring total income of ₹ 6,72,89,490/-. The assessee produced the books of accounts and relevant supporting documents before the ld. AO which were examined on test check basis. The ld. AO observed that the assessee had earned exempt dividend income of ₹ 40,83,869/- during the year under appeal and had not disallowed any amount u/s 14A of the Act in the return of income. When show caused in this regard, the assessee filed a reply that no expenditure was incurred by it for earning exempt income. The ld. AO directed the assessee to furnish the workings of amount disallowable u/s 14A of the Act. The assessee accordingly furnished the workin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following grounds: I.T.A. No. 1239/Kol/2016 Assessee Appeal 1. That on the facts and circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance, being 0.5% of average value of investment under section 14A of the Act while computing income under the normal provision of the Act. I.T.A. No. 1150/Kol/2016 Revenue Appeal 1. That on the facts and in the circumstances of the Ld. CIT(A) has erred in directing the AO to consider only those investments on which dividend has been earned by the assessee in arriving average value of investments and not all investments held during the relevant financial year. 4. The ld. AR submitted that against the order passed by the Ld. CIT(A) for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. AO and also argued that the workings filed by the assessee has been perused by the ld. AO and ignored by him which itself amounts to satisfaction recorded by the ld. AO. 5. We have heard the rival submissions. We find that the ld. AO is supposed to record satisfaction in an objective manner with cogent reasons having regard to the accounts of the assessee in order to refute the claim made by the assessee that no expenditure was incurred for earning exempt income. This is the mandate provided in section 14A(2) of the Act read with Rule 8D(1) of the Rules. In this regard, the reliance has been rightly placed by the ld. AR on the decision of this Tribunal in assessee s own case for the assessment year 2010-11 in I.T.A. No. 2212/Kol/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AO in the instant case. This issue is now settled in favour of the assessee by the various decisions of Hon ble Jurisdictional High Court in the following cases: i) CIT vs. R.E.I. Agro Ltd. in GA No. 3022 of 2013 ITAT No. 161 of 2013 dated 23.12.2013 ii) CIT vs. Ashish Jhunjhunwala in GA No. 2990 of 2013 ITAT No. 157 of 2013 dated 08.01.2014. We find that in both the decisions it has been held that it is the duty of the Ld. AO first to record satisfaction having regard to accounts of the assessee that the claim made by the assessee with regard to non-incurrence of any expenditure for the purpose of earning income, is incorrect with cogent reasons thereon. Without recording such satisfaction, the Ld. AO cannot proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that though the Hon ble Calcutta High Court in the case of Exide Industries Ltd vs Union of India reported in 292 ITR 470 (Cal) had struck down the provisions of section 43B(f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon ble Supreme Court which initially in Special Leave to Appeal (Civil) CC 12060 / 2008 dated 8.9.2008 had held as under:- The petition was called on for hearing today. Upon hearing counsel the court made the following Order. Issue Notice. In the meantime, there shall be stay of the impugned judgement, until further orders. Later the Hon ble Supreme Court in Special Leave to Appeal (Civil) No(s). CC 22889 / 2008 dated 8.5.2009 had held as under:- T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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