TMI Blog2018 (6) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant : Ms. Sai Sudha Multani, A.R For The Respondent : Shri M.C. Omi Ningshen, D.R ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-52, Mumbai, dated 31.03.2016 which it itself arises from the order passed by the A.O under Sec.143(3) of the Income Tax, 1961 (for short Act ) dated 28.03.2014. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal: 1.1 On the facts and in the circumstances of the case and in law, the commissioner of Income-tax (Appeals) erred in confirming the disallowance made by the Assessing Officer under section 14A of the Income-tax Act, 1961 ( the Act ) as per rule 8D of the Income-tax Rules amounting to ₹ 48,29,265/-. 1.2 In doing so, the Commissioner of Income-tax (Appeals) erred in the following respects: ( a) In not accepting the reasonable basis working made by the appellant for the purpose of making disallowance under section 14A of the Act; ( b) in not appreciating the fact that provisions of sub-section (2) of section 14A of the Act could be invoked only if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received exempt dividend income of ₹ 76,90,018/-, however it had disallowed an amount of ₹ 441/- only under Sec.14A of the Act. The A.O further observed that while for the assessee in A.Y 2005-06 to A.Y 2007-08 had disallowed proportionate interest expenses attributable to exempt income yielding investments appearing in the balance sheet, in the ratio which such investments did bear to the total assets, however a similar disallowance of the interest expenses was not made during the year under consideration. It was further noticed by the AO that in A.Y 2008-09 the assessee had further supplemented the disallowance of the interest expenses under Sec.14A, by a further sum of disallowance of other indirect expenses attributable to earning of the exempt dividend income. Similar disallowance was also found to have been made by the assessee under Sec.14A r.w.Rule 8D in A.Y 2009- 10. It was in the backdrop of the aforesaid facts observed by the A.O that the assessee taking a departure from the disallowances which were consistently made by him under Sec.14A in the preceding years, had during the year under consideration attributed only a sum of ₹ 441/- as expenses incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the backdrop of the judgment of Hon ble Apex Court in the case of Godrej Boyce Manufacturing Co. Ltd. (supra), thus dismiss the same. 6. The ld. A.R assailing the validity of the disallowance made by the AO under Sec. 14A(2) of the Act, submitted that as the disallowance under the aforesaid statutory provision was made by the A.O without being satisfied with the correctness of the claim of the assessee in respect of such expenditure incurred in relation to income which does not form part of its total income under the Act, having regard to the accounts of the assessee, thus could not be sustained on the said count itself and was liable to be vacated. The ld. A.R in support of his aforesaid contention placed reliance on the judgment of the Hon ble Supreme Court in the case of Godrej Boyce Manufacturing Co. Ltd. Vs. DCIT Anr. (2017) 394 ITR449 (SC).. On the basis of his aforesaid deliberations, it was submitted by the ld. A.R that the disallowance of ₹ 48,28,265/- made by the A.O under Sec. 14A r.w. Rule 8D, not being in accord with the aforesaid judgment of the Hon ble Apex Court in the case of Godrej Boyce Manufacturing Company (supra) was liable to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula 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. We find that in the case of the assessee before us, as observed hereinabove, the claim of disallowance under Sec.14A of the assessee was dislodged by the A.O, not on the ground that having regard to the accounts of the assessee for the year under consideration, he was not satisfied with the correctness of the claim of expenses which the assessee had attributed to earning of the exempt income. Rather, a careful perusal of the order of the A.O rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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