2019 (4) TMI 190

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..... the case. 2. The CIT (A) erred in confirming the disallowance made by the Assessing Officer (AO) under section 14A read with rule 8D of the Income Tax Rules 1962 amounting to Rs. 2,54,231/-. The whole of the additions be deleted in full. 3. The CIT(A) erred in coming to the conclusion that the AO has recorded his satisfaction about appellant's claim of non-incurring of any expenditure to earn the exempted income was incorrect. 3. Brief facts of the case are as under: In this case, the Assessing Officer (A.O. for short) observed that on the basis of the Balance Sheet, it was noticed that the assessee is having investments and the said investments earned dividend income which is exempt from tax. Since the assessee has not shown any exp .....

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..... t no administrative expenditure is incurred on investments is not acceptable, as decision making of investment in mutual fund, issuing of cheques & accounting of statements leads to administrative expense. Since the assessee had shown nil expenditure, the A.O. opined that the administrative expenditure based on rule 8D needs to be disallowed. Accordingly, he worked out the disallowance u/s.14A under Rule 8D as under:- Accordingly, the disallowance u/s 14A is worked out under Rule 8D as under:- (i) Amount of expenditure directly relating to income Which does not form part of total income - Nil (ii) In a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any .....

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..... n. 6. Now the assessee is in appeal before us. 7. We have heard both the counsel and perused the records. The ld. Counsel of the assessee reiterated that there is no satisfaction by the A.O. that the assessee has not incurred any expenditure to earn the exempt income. In this regard, he placed reliance on several Tribunal decision in this regard. 8. As regards the tribunal's decision referred by the ld. Counsel of the assessee, we find that they were rendered on the facts of the case, with a finding that there was no whisper by the A.O. regarding his satisfaction that the assessee has incurred expenditure to earn exempt income. In the present case, we find that it is not a whisper but a categorical finding and satisfaction of the A.O. th .....

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