TMI Blog2019 (6) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... , is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. Sub-rule (1) of Rule 8D also makes similar provision provides that where the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of expenditure made by the assessee or that the assessee claims that no expenditure has been incurred in relation to income which does not form part of the total income, the Assessing Officer would determine the amount of expenditure in terms of sub-rule (2). For applicability of sub-rule (2) of Rule 8D, the requirements of sub-rule (1) would have to be satisfied. Only then, the formula provided in the unamended clause would apply. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed through no such restriction is prescribed under Rule 8D of the Income Tax Rules? 3. Respondent - assessee is a Private Limited Company and is engaged in the business of making investments, earning interest income as well as earning income from investment in mutual funds. For the assessment year 2009-10, the assessee had filed return of income in which the assessee had claimed total expenses of ₹ 24.19 Lakhs (rounded off). Out of this, the assessee voluntarily disallowed ₹ 7.79 Lakhs (rounded off) of expenditure relatable to activity of earning tax free income. The Assessing Officer rejected such a working out and applied the unamended formula of Rule 8D(ii)(3) of the Income Tax Rules and made a disallowance of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of expenditure made by the assessee or that the assessee claims that no expenditure has been incurred in relation to income which does not form part of the total income, the Assessing Officer would determine the amount of expenditure in terms of sub-rule (2). For applicability of sub-rule (2) of Rule 8D, the requirements of sub-rule (1) would have to be satisfied. Only then, the formula provided in the unamended clause would apply. 6. In the present case, as noted, the assessee s entire claim of expenditure in relation to its business activities was ₹ 24.19 Lakhs out of which, the assessee had voluntarily red ..... X X X X Extracts X X X X X X X X Extracts X X X X
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