TMI Blog2019 (2) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, is no longer a good law because where the assessee has not earned any dividend income forming part of the total income during the year under assessment, section 14A read with Rule 8D is not attracted. So making disallowance u/s 14A read with Rule 8D in a mechanical manner without recording any dissatisfaction as to the working out made by the assessee that he has not incurred any expenses nor earned any dividend income during the year under assessment is not permissible under law. So consequently AO as well as CIT(A) have eared in disallowing/confirming the addition made u/s 14A read with Rule 8D - Decided in favour of assessee. - ITA No.3719/Del./2018 - - - Dated:- 14-12-2018 - Shri N.K. Billaiya, Accountant Member And Shri Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity and hotel management services who has made investment in equity shares of domestic subsidiaries companies. AO while examining the investment made by the assessee in the light of the provisions contained u/s 14A of the Act called upon the assessee to exaplain as to why disallowance u/s 14A of the Act should not be made as per Rule 8D of the Income Tax Rules 1962 (for short the Rules) qua the investment shown in the balance sheet. AO being dissatisfied with the explanation furnished by the assessee company proceeded to compute the disallowance u/s 14A of the Act read with Rule 8D of the Rules as under :- Table 3. So, on the basis the aforesaid calculation, AO proceeded to make disallowance to the tune of ₹ 6,64,325/- u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Rule 8D in case cited as Maxopp Investment Ltd. vs. CIT(2012) 347 ITR 272 (Delhi) held as under :- Section 14A even prior to the introduction of subsections (2) and (3) would require the Assessing Officer to first reject the claim of the assessee with regard to the extent of such expenditure and such rejection must be for disclosed cogent reasons. It is then that the question of determination of such expenditure by the Assessing Officer would arise. The requirement of adopting a specific method of determining such expenditure has been introduced by virtue of .sub-section (2) of section 14A . Prior to that, the assessee was free to adopt any reasonable and acceptable method. So, even for the prerule 80 period, whenever the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Ltd. vs. DCIT - 394 ITR 449 (SC) thrashed the issue in controversy as to invoking of the provisions contained under Rule 8D of the Rules by observing as under : 37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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