TMI Blog2018 (5) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO as well as the CIT(A) have failed to take into account the expenses incurred by the assessee and there was no satisfaction recorded by the Assessing Officer regarding invocation of Rule 8D. This legal aspect was overlooked by the Assessing Officer as well as by the CIT(A). Therefore, the order of the CIT(A) does not survive. - Decided in favour of assessee. - ITA No. 5893/DEL/2017 - - - Dated:- 21-3-2018 - SHRI R. S. SYAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. G. S. Kohli, CA For The Respondent : Sh. V. K. Tiwari, Sr. DR ORDER PER SUCHITRA KAMBLE, JM This appeal has been filed by the assessee against the order dated 12/07/2017 passed by CIT(A) -5 New Delhi fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the concern investment was made in Financial Year 2010-11 i.e. Assessment Year 2011-12 it was invested from the sufficient funds available with the assessee company as shown in the balance-sheet as on 31/3/2011. The assessee further submitted before the Assessing Officer that the only unsecured loan outstanding in the balance sheet is related to M/s Avaita Properties Pvt. Ltd. which is a holding Company and it was given free of interest. The Assessing Officer disallowed ₹ 7,18,693/- u/s 14A calculating as prescribed under Rule 8D of the Income Tax Rules 1962. 4. Being aggrieved by this order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee relied upon the decision of the Hon'ble High Court in case of H. T. Lulia Vs. Principal CIT 399 ITR 576 Eishar Motors Vs. CIT(A) 398 ITR 51 as well as the Hon ble Allahabad High Court decision in case of CIT Vs. UP Electronics Corporation Ltd. 397 ITR 113. The Ld. AR further submits that the Assessing Officer referred Circular No. 5 of 2004 where they verified Section 14A would apply evident when exempted income was not earn in a particular Assessment Year. The CBDT Circular could not override expressed provision of Section 14A read with Rule 8D that would not preclude the assessee from taking a stand that no disallowance u/s 14A of the Act was called for in Assessment Year in question because no exempt income was earn and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r with reference to the books of accounts. 7. We have heard both the parties and perused the material available on record. The assessee while giving explanation before the Revenue authorities submitted that during the year, the assessee company has not made any investment. The entire investment was made in the earlier years from their own funds. The same was not disputed by the Revenue authorities and is supported with the audit account of the earlier years to prove that the entire investment was made from self generated sources. Further, no expense like interest etc. was claimed in the earlier years as well as in the present Assessment Year. The main factor for invoking Section 14A along with Rule 8D is to record the satisfaction that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently, on the aspect of administrative expenses being disallowed since there was a failure by the Assessing Officer to comply with the mandatory requirement of Section 14A(2) of the Act read with Rule 8D (1) (A) of the Rules record of satisfaction is required there under. The question of re-applying Rule 8D(2) (iii) of the Rules did not arise. In the present case also, the same does not arise. The Assessing Officer as well as the CIT(A) have failed to take into account the expenses incurred by the assessee and there was no satisfaction recorded by the Assessing Officer regarding invocation of Rule 8D. This legal aspect was overlooked by the Assessing Officer as well as by the CIT(A). Therefore, the order of the CIT(A) does not survive. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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