TMI Blog2020 (3) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Rules 1962, the Assessing Officer is required to be satisfied as provided in subsection 2 of Section 14A of the Act 1961. We may refer recent pronouncement of this Court in the case of Principal Commissioner of Income Tax Vs. Gujarat State Fertilizer and Chemical Ltd [ 2018 (10) TMI 1041 - GUJARAT HIGH COURT] finding of fact that as the Assessing Officer did not record any satisfaction under Section 14A(2) OF the Act 1961 prior to invoking Rule 8D, he could not have made any disallowance by applying Rule 8D of the Rules 1962. - Decided against revenue. Disallowance u/s 14A to the book profit under Section 115JB - HELD THAT:- As Question No.2(A) is answered in favour of the assessee to the effect that the Tribunal has not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer was of the view that though the assessee has disallowed the amount of ₹ 5500/under Section 14A of the Act 1961 in the statement of income, the assessee did not correctly work out the disallowance. According to the Assessing Officer, the correct working for the purpose of disallowance under Section 14A of the Act 1961 r.w. Rule 8D of the Income tax Rules,1962 (for short the Rules 1962) was ₹ 41,325/as against ₹ 5500/ calculated by the assessee. The Assessing Officer, therefore, made an addition of ₹ 35,285/to the total income of the assessee. 4. The assessee being aggrieved preferred an appeal before the CIT(A). The CIT(A) rejected the appeal qua the disallowance made by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... damentally changing the understanding and interpretation of Section 14A and Rule 8D. It went on to hold that the judgment of the Supreme Court does not lay down the proposition that, the requirement of sub-rule (1) of Rule 8D of recording the satisfaction by the Assessing Officer before applying the formula given in sub-rule (2) of Rule 8D is done away with. It clarifies that the judgment in the case of Maxopp Investment Limited does not lay down a proposition that the moment it is demonstrated that the assessee had availed of mixed funds and utilized them for making investment into securities earning tax free income, Section 14A read with Rule 8D would be attracted automatically. The assessee has further relied on the judgment in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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