TMI Blog2018 (11) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... t case the AO has not recorded his satisfaction regarding the correctness of the self disallowance made by the assessee under Section 14A, as is mandatory in terms of sub section (2) of Section 14A to invoke and take recourse to Rule 8D of the Rules. Thus, the Assessing Officer, did not act as per and in terms of the statute. - Decided against revenue. - ITA 277/2018 - - - Dated:- 7-9-2018 - MR. SANJIV KHANNA AND MR. CHANDER SHEKHAR JJ. Appellant Through: Mr. Puneet Rai, Standing Counsel Respondent Through: Mr. Simran Mehta, Advocate O R D E R Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 ( Act for short) against order dated 01.09.2017, passed by the Income Tax Appellate Tribunal ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished the requisite certain information. A0 observed that Section 14A of the I.T. Act, 1961 regulates the expenditure which was incurred in relation to exempt income. By virtue of this section no deduction shall be allowed in respect of expenditure incurred by the assessee on account of income which does not form part of the total income under the Act. 'The CBDT has notified rule 8D to avoid ad-hoc disallowance to impart visibility to the expenditure incurred for earning exempt income. Moreover, procedure for computation of disallowance has been provided in sub-sections (2) and (3) of section 14A of the I T Act. The ITAT, Special Bench, New Delhi in the case of MIS Cheminvest Ltd. ITA no 87/De1/2008 has also held that the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessed the income of the assessee at ₹ 4,37,12,090/- vide order dated 21.2.2014 passed u/s 143(3) of the Act. 4. The enhanced disallowance was deleted by the Commission of Income Tax (Appeals) observing that the assessee had made disallowance ₹ 1,04,90,253/- under Section 14 A, which was more than the exempt income of ₹ 88,83,863/-. The disallowance made by the assessee being reasonable no further disallowance was necessary. 5. The Tribunal, vide impugned order, has upheld the findings recorded by the Commission of Income Tax (Appeals). 6. This appeal has no merit as Assessing Officer had not recorded necessary and required satisfaction, in terms of sub section (2) to Section 14A of the Act for invoking Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore 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. 7. In the present case the Assessing Officer has not recorded his satisfaction regarding the correctness of the self disallowance made by the assessee under Section 14A, as is mandatory in terms of sub section (2) of Section 14A of the Act to invoke and take recourse to Rule 8D of the Rules. Thus, the Assessing Officer, did not act as per and in terms of the statute. 8. In view of the aforesaid position, appeal by the Revenue m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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