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TMI Blog2018 (3) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Revenue against the order dated 14/08/2014 passed by CIT(A)-V, New Delhi. 2. The grounds of appeal are as under:- 1. " On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 6,47,21,925/- made by the A.O. u/s 14A in normal computation as well as under special provisions of the Act by ignoring the fact that expenses relatable to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o income which does not form part of the total income under this Act and held that this is a fit case for invoking the provisions of Section 14A(2) of the I.T Act 1961 and to compute the expenses in accordance with the Rule 8D of the Income Tax Rules 1962. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese expenses it is evident that these are not related to earning of the exempt income and therefore cannot be subjected to disallowance in terms of section 14A of the Act. The other argument of the appellant is that in terms of section 14A (2) the AO is mandated to determine the expenses incurred in relation to exempt income in terms of the method prescribed under Rule 8D only if the AO is not sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is imperative for the AO to record his satisfaction with regard to the correctness of the assessee's claim with regard to Section 14A(2) of the IT Act, before embarking upon application of Rule 8D(2)(ii). Additionally, it is also seen that in the facts of the case while the assessee has made a suo motu disallowance of Rs. 3,43,030/- but then the balance expense of Rs. 5,18,810/- cannot be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITAT has held that disallowance under section 14A cannot exceed the total actual expenditure incurred and claimed by the assessee. Applying the ratio of the above decisions to the facts of the appellant case the appeal is allowed and the excess additions made in terms of Rule 8D for an amount of Rs. 6,47,21,925/- is directed to be deleted. As a logical corollary this addition would also be requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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